A relative company is one that is created under a specific name between two or more people, each of whom is responsible according to the amount of their investment in the company. The name must state “relative company” and at least one of the shareholders’ names. Given that the name of the company does not include all the partners’ names, the phrase “and partners” or “and brothers” must be stated.
Relative company resembles a general partnership with the difference that in a general partnership, all shareholders are equally responsible to pay for the company’s debts whereas in relative companies, according to the 186th law of business: “in case the company’s funds are not sufficient to pay for its debts, each partner is responsible to pay for the company’s debts according to their investment in the company.”
Basis of relative company
The basis for a relative company is not clearly stated in the law, but it can be deduced from the mentioned points that the foundation for a relative company is as follows:
A: Company chairman
B: All partners
The laws for management of a relative company are exactly the same as general partnerships. Therefore, in a relative company, at least one manager is chosen either from among the partners or from outside, and they are legally responsible towards the company, just as lawyers are responsible towards their clients.
Furthermore, according to article 184: “in a relative company’s name, the phrase “relative company” and at least one of the partners’ names must be mentioned. Given that the name of the company does not include all the partners’ names, the phrase “and partner” or “and brothers” must be included after the mentioned partners’ names.” Therefore, similarly to a general partnership, the name of one or more partners must be mentioned in the company’s name and instead of the non-mentioned names, the phrases “and partners” or “and brothers” must be included.
Conditions of relative company formation
- Presence of at least 2 partners
- Payment of the entire cash capital and estimate and non-cash capital (the estimate of the non-cash capital must be done with complete consent of all partners according to article 122 of the business law, therefore, assessment by an official court-mandated critic is obligatory based on the law.)
- The name of the company must state “relative” and at least one of the partners’ names
Necessary documents for relative company registration
- Two certified copies of the company letter
- Two copies of the application
- Two certified copied of the company Statute
- Completion of the nomination form respecting priority order for the selected names
- Original certificate of activity from the respective authorities in cases where a license is needed.
- Certified copies of identification documents of all partners, managers and board of supervisors (in case the number of partners exceeds 12 people)
- Original criminal records clearance form of board members and CEO
- Two copies of the minutes of the General Assembly of Founders meeting
- Two copies of the minutes of the board of directors’ meeting
- Original mandate for the lawyer, in case the company registration is done by a lawyer.
After the registration of the company, the advertisement and attachments for it are printed in official newspapers and one of the frequent flyers according to article 197 of the law.
For more information, please contact our experts at Sarasa Law Office.