Traders and Business Organizations

150 Pages·2011·0.93 MB·English

by  Mizanie Abate Tadesse

Law of Traders and Business
Organizations
Teaching Material

Prepared by:

Alemayehu Fentaw
&
Kefene Gurmu

Prepared under the Sponsorship of the Justice and Legal System
Research Institute

2009
Course Contents
Chapter 1: Introduction------------------------------------------------------------------------------------1
1.1 A Brief Account of Ethiopian Law of Traders and Business Organizations--------1
1.2 General Orientation of the Commercial Code ------------------------------------------3
1.3 Scope of the Code -------------------------------------------------------------------------13
Chapter 2: Traders and Business-----------------------------------------------------------------------14
2.1 Traders: Defined---------------------------------------------------------------------------14
2.1.1Positive Definition---------------------------------------------------------------------15
2.1.2. Negative Definition------------------------------------------------------------------17
2.2 Business ------------------------------------------------------------------------------------19
2.3 Good will and its protection by unfair competition-----------------------------------22
2.4 Commercial Unfair Competition--------------------------------------------------------24
2.4.1. The Specific Standard----------------------------------------------------------------26
A. Misleading Commercial Practices----------------------------------------------26
B. False Discrediting Statements----------------------------------------------------27
2 .5 Effect of Unfair Competition----------------------------------------------------------------28
Chapter 3: Business Organizations -------------------------------------------------------------------40
3.1 Introduction --------------------------------------------------------------------------------40
3.1.1 Definition -------------------------------------------------------------------------41
3.1.2 Distinguishing between business organizations and associations--------- 42
3.1.3 Corporative societies distinguished -------------------------------------------43
3.2 Classification of business organization ------------------------------------------------44
3.2.1 Partnership and companies -----------------------------------------------------44
i) partnerships -------------------------------------------------------------------44
ii) companies --------------------------------------------------------------------45
3.2.2 forms of business organizations------------------------------------------------45
3.2.3 distinguishing between commercial and
non-commercial business organizations--------------------------------------------46
i
3.3 formation------------------------------------------------------------------------------------47
3.3.1 key elements in the definition of the partnership agreement----------------47
3.3.2 publicity ---------------------------------------------------------------------------52
Chapter 4: Ordinary Partnership-----------------------------------------------------------------------55
4.1 Contributions ------------------------------------------------------------------------------56
4.2 Partnerships capital ----------------------------------------------------------------------57
4.3 Partnership property ----------------------------------------------------------------------57
4.4 Ownership and possession of partnership property -----------------------------------57
4.5 Creditor of the partnership----------------------------------------------------------------58
4.6 Creators of partners------------------------------------------------------------------------59
4.7 Management -------------------------------------------------------------------------------59
4.7.1 Types of managers ---------------------------------------------------------------59
4.7.2 The authority of managers ------------------------------------------------------61
4.8 Relationship among partners-------------------------------------------------------------62
4.9 Mode of doing act to bind a firm--------------------------------------------------------63
4.10 Dissolution, windup and termination ---------------------------------------------------64
4.10.1 Dissolution ------------------------------------------------------------------------65
4.10.2 Winding up------------------------------------------------------------------------66
4.10.3 Distribution of Assets------------------------------------------------------------68
Chapter 5 joint venture-----------------------------------------------------------------------------------71
5.1 Characteristics of joint venture ----------------------------------------------------------71
5.2 Management ---------------------------------------------------------------------------------74
5.3 Dissolution-----------------------------------------------------------------------------------75
5.4 Expulsion of partner in lieu of dissolution ----------------------------------------------75
Chapter 6 General Partnership -------------------------------------------------------------------------80
6.1 Contributions ------------------------------------------------------------------------------80
6.2 Transfer of shares -------------------------------------------------------------------------80
6.3 Memorandum of association and registration -----------------------------------------81
ii
6.4 Powers of manager ------------------------------------------------------------------------82
6.5 Liability of partners------------------------------------------------------------------------86
Chapter 7: Limited partnership ------------------------------------------------------------------------89
Chapter 8: Share Companies----------------------------------------------------------------------------93
8.1 Companies in general---------------------------------------------------------------------93
8.2 Share Company ----------------------------------------------------------------------------97
8.2.1 Nature ------------------------------------------------------------------------------97
8.2.2 Founders---------------------------------------------------------------------------98
8.2.3 Memorandum and Articles of Associations---------------------------------100
8.3 Securities ----------------------------------------------------------------------------------110
8.3.1 Equity securities ----------------------------------------------------------------110
8.3.2 Shares-----------------------------------------------------------------------------111
8.3.2.1 Issuance ------------------------------------------------------------111
8.3.2.2 Forms ---------------------------------------------------------------112
8.3.2.3 Classes---------------------------------------------------------------113
8.3.2.4 Rights and duties of shareholders -------------------------------113
8.3.2.5 Temporary warrants ----------------------------------------------115
8.3.2.6 Joint holdings ------------------------------------------------------115
8.3.3 Debt securities ------------------------------------------------------------------116
8.3.3.1 Debentures ---------------------------------------------------------116
8.3.3.2 Issuance ------------------------------------------------------------117
8.3.3.3 Forms ---------------------------------------------------------------118
8.3.3.4 Company’s duties with respect to debentures------------------119
8.4 Corporate management -----------------------------------------------------------------120
8.4.1 Shareholders’ meetings --------------------------------------------------------120
8.4.1.1 Distinguishing between various types of meetings -----------121
8.4.1.2 Distinguishing between various types of resolutions ---------125
8.4.2 Directors -------------------------------------------------------------------------126
8.4.2.1 Appointment -------------------------------------------------------127
8.4.2.2 Rights, Duties, powers and liabilities --------------------------127
iii
8.4.2.3 Removal ------------------------------------------------------------131
8.4.3 General manager ----------------------------------------------------------------131
8.4.3.1 Appointment -------------------------------------------------------131
8.4.3.2 Rights, duties, powers and liabilities ---------------------------131
8.4.3.3 Removal-------------------------------------------------------------132
8.5 Corporate Accounts and Audit ---------------------------------------------------------132
8.5.1 Out-of-capital payment of interest -------------------------------------------132
8.5.2 Reserve funds -------------------------------------------------------------------133
8.5.3 Profits and Dividends ----------------------------------------------------------133
8.5.4 Appointment of auditors ------------------------------------------------------134
8.6 Dissolution and winding-up-------------------------------------------------------------135
Chapter 9: Private Limited Company----------------------------------------------------------------141
9.1 Nature -------------------------------------------------------------------------------------141
9.2 Formation ---------------------------------------------------------------------------------141
9.3 Liability of Members for the Company’s Obligations------------------------------142
9.4 Members’ Meetings ---------------------------------------------------------------------143
9.5 Role of Management --------------------------------------------------------------------144
9.6 Shares and Transactions in Shares ----------------------------------------------------146
9.7 Transfer inter vivos and mortis causa -------------------------------------------------147
Chapter 10: Conversion and Amalgamation of Business Organizations --------------------------149
10.1 Conversion -------------------------------------------------------------------------------149
10.1.1 Meaning -----------------------------------------------------------------149
10.1.2 Mode --------------------------------------------------------------------149
10.1.3 Effect --------------------------------------------------------------------149
10.2 Amalgamation ---------------------------------------------------------------------------150
10.2.1 Meaning --------------------------------------------------------------------------150
10.2.2 Mode -----------------------------------------------------------------------------151
10.2.3 Effects------------------------------------------------------------------------------51
References………………………………………………………………………152
iv
Law of Traders and Business
Organizations
Teaching Material

Prepared by:

Alemayehu Fentaw
&
Kefene Gurmu

Prepared under the Sponsorship of the Justice and Legal System
Research Institute

2009
1
2
Course Contents
Chapter 1: Introduction------------------------------------------------------------------------------------1
1.1 A Brief Account of Ethiopian Law of Traders and Business Organizations--------1
1.2 General Orientation of the Commercial Code ------------------------------------------3
1.3 Scope of the Code -------------------------------------------------------------------------13
Chapter 2: Traders and Business-----------------------------------------------------------------------14
2.1 Traders: Defined---------------------------------------------------------------------------14
2.1.1Positive Definition---------------------------------------------------------------------15
2.1.2. Negative Definition------------------------------------------------------------------17
2.2 Business ------------------------------------------------------------------------------------19
2.3 Good will and its protection by unfair competition-----------------------------------22
2.4 Commercial Unfair Competition--------------------------------------------------------24
2.4.1. The Specific Standard----------------------------------------------------------------26
A. Misleading Commercial Practices----------------------------------------------26
B. False Discrediting Statements----------------------------------------------------27
2 .5 Effect of Unfair Competition----------------------------------------------------------------28
Chapter 3: Business Organizations -------------------------------------------------------------------40
3.1 Introduction --------------------------------------------------------------------------------40
3.1.1 Definition -------------------------------------------------------------------------41
3.1.2 Distinguishing between business organizations and associations--------- 42
3.1.3 Corporative societies distinguished -------------------------------------------43
3.2 Classification of business organization ------------------------------------------------44
3.2.1 Partnership and companies -----------------------------------------------------44
i) partnerships -------------------------------------------------------------------44
ii) companies --------------------------------------------------------------------45
3.2.2 forms of business organizations------------------------------------------------45
3.2.3 distinguishing between commercial and
non-commercial business organizations--------------------------------------------46
3.3 formation------------------------------------------------------------------------------------47
3.3.1 key elements in the definition of the partnership agreement----------------47
3.3.2 publicity ---------------------------------------------------------------------------52
3
Chapter 4: Ordinary Partnership-----------------------------------------------------------------------55
4.1 Contributions ------------------------------------------------------------------------------56
4.2 Partnerships capital ----------------------------------------------------------------------57
4.3 Partnership property ----------------------------------------------------------------------57
4.4 Ownership and possession of partnership property -----------------------------------57
4.5 Creditor of the partnership----------------------------------------------------------------58
4.6 Creators of partners------------------------------------------------------------------------59
4.7 Management -------------------------------------------------------------------------------59
4.7.1 Types of managers ---------------------------------------------------------------59
4.7.2 The authority of managers ------------------------------------------------------61
4.8 Relationship among partners-------------------------------------------------------------62
4.9 Mode of doing act to bind a firm--------------------------------------------------------63
4.10 Dissolution, windup and termination ---------------------------------------------------64
4.10.1 Dissolution ------------------------------------------------------------------------65
4.10.2 Winding up------------------------------------------------------------------------66
4.10.3 Distribution of Assets------------------------------------------------------------68
Chapter 5 joint venture-----------------------------------------------------------------------------------71
5.1 Characteristics of joint venture ----------------------------------------------------------71
5.2 Management ---------------------------------------------------------------------------------74
5.3 Dissolution-----------------------------------------------------------------------------------75
5.4 Expulsion of partner in lieu of dissolution ----------------------------------------------75
Chapter 6 General Partnership -------------------------------------------------------------------------80
6.1 Contributions ------------------------------------------------------------------------------80
6.2 Transfer of shares -------------------------------------------------------------------------80
6.3 Memorandum of association and registration -----------------------------------------81
6.4 Powers of manager ------------------------------------------------------------------------82
6.5 Liability of partners------------------------------------------------------------------------86
Chapter 7: Limited partnership ------------------------------------------------------------------------89
Chapter 8: Share Companies----------------------------------------------------------------------------93
8.1 Companies in general---------------------------------------------------------------------93
8.2 Share Company ----------------------------------------------------------------------------97
8.2.1 Nature ------------------------------------------------------------------------------97
8.2.2 Founders---------------------------------------------------------------------------98
4
8.2.3 Memorandum and Articles of Associations---------------------------------100
8.3 Securities ----------------------------------------------------------------------------------110
8.3.1 Equity securities ----------------------------------------------------------------110
8.3.2 Shares-----------------------------------------------------------------------------111
8.3.2.1 Issuance ------------------------------------------------------------111
8.3.2.2 Forms ---------------------------------------------------------------112
8.3.2.3 Classes---------------------------------------------------------------113
8.3.2.4 Rights and duties of shareholders -------------------------------113
8.3.2.5 Temporary warrants ----------------------------------------------115
8.3.2.6 Joint holdings ------------------------------------------------------115
8.3.3 Debt securities ------------------------------------------------------------------116
8.3.3.1 Debentures ---------------------------------------------------------116
8.3.3.2 Issuance ------------------------------------------------------------117
8.3.3.3 Forms ---------------------------------------------------------------118
8.3.3.4 Company‟s duties with respect to debentures------------------119
8.4 Corporate management -----------------------------------------------------------------120
8.4.1 Shareholders‟ meetings --------------------------------------------------------120
8.4.1.1 Distinguishing between various types of meetings -----------121
8.4.1.2 Distinguishing between various types of resolutions ---------125
8.4.2 Directors -------------------------------------------------------------------------126
8.4.2.1 Appointment -------------------------------------------------------127
8.4.2.2 Rights, Duties, powers and liabilities --------------------------127
8.4.2.3 Removal ------------------------------------------------------------131
8.4.3 General manager ----------------------------------------------------------------131
8.4.3.1 Appointment -------------------------------------------------------131
8.4.3.2 Rights, duties, powers and liabilities ---------------------------131
8.4.3.3 Removal-------------------------------------------------------------132
8.5 Corporate Accounts and Audit ---------------------------------------------------------132
8.5.1 Out-of-capital payment of interest -------------------------------------------132
8.5.2 Reserve funds -------------------------------------------------------------------133
8.5.3 Profits and Dividends ----------------------------------------------------------133
8.5.4 Appointment of auditors ------------------------------------------------------134
8.6 Dissolution and winding-up-------------------------------------------------------------135
Chapter 9: Private Limited Company----------------------------------------------------------------141
5