According to article 116 of general partnership trade law, a general partnership is a company established under a specific name for business affairs between two or more companies with a partnership liability. Given that the company’s capital is not enough to return the company’s debts, each partner is held responsible for paying the entire company’s debt. Any other agreements made between the partners themselves are considered null and void for third parties. The name of the company should include the phrase “general partnership” and at least one of the partners’ names.
Partners’ liability limits in general partnership companies
In a general partnership company, all associates have a share in the company’s income and expenses and each person has unlimited responsibility towards the company’s obligations. In fact, their responsibilities are not limited to their shares in the company, and whenever the company falls in debt for whatever reason, the creditor is free to refer to all or any of the partners in order to receive their debt.
Registration and establishment of these companies is done with an unofficial agreement and very little cost, in the same way as limited-responsibility companies. On the other hand, transferring general partnership companies’ ownership is very difficult. For that, the previous general partnership must be dissolved and a new one formed.
In these companies, in case of death or exit of a member, the company is dissolved and its activity is finished. The income of a general partnership company is subject to income tax and the capital for these companies are provided by the associates.
As can be deducted from the laws of trade, these companies have some flaws such as unlimited responsibility of the owner regarding the companies’ commitments, limited activity time of these companies, difficulty of ownership transference, and inability of development due to provide necessary funds for investments.
Number of members and amount of capital of general partnership company
In a general partnership, the minimum number of partners is 2 people. However, concerning the capital of the company, there is no minimum capital limit. The number of managing board members is one or more. Responsibility of associates is unlimited and all partners are cooperatively responsible towards creditors.
Necessary documents for registration:
- Two copies of application
- Two copies of company letter
- Two copies of company Statute
- Copies of all members’ birth certificate and national ID cards
- If needed, permission from authorities
In the end, it must be noted that one of the important points in registering a company, is printing a summary of the company letter in one of the official newspapers at the company’s cost. In case the company has branches in other cities, the name of the mentioned branches must be mentioned in the advertisement and in local newspapers.
For more information, please contact our experts at Sarasa Law Office.