Presentation on theme: "Part 2 ; Company Law 1 Company law The general theory Partnership company Joint stock company."— Presentation transcript:
Part 2 ; Company Law 1 Company law The general theory Partnership company Joint stock company
Definition 2 The Egyptian commercial code does not contain any definition of the company. But article 505 of the civil code defines the company as " a contract by which two or more persons undertake jointly to enter into a business (a business is an undertaking of a pecuniary nature) by providing contributions of property or of services with of the objective of sharing the profits or the losses of the business."
Definition 3 But the term company has another meaning, different from that given by the civil code. In the legal language, it means also the legal person that is created by the contract. In fact the company contract has a very characteristic feature that distinguishes it from other contracts, namely that it gives life to a new legal person (a juristic person) separate from the persons of the parties to the contract. Hence, the term contract means at the same time the contract and the juristic person created by that contract.
4 The General theory Elements of company contract The nullity moral personality DissolutionLiquidation
Kinds and forms of companies 5 Kinds of companies Commercial and civil Companies of persons The partnership. The limited partnership Capital companies Joint stock The limited partnership by shares Limited Liability company LLC
Commercial and civil companies 6 Before the promulgation of the new code of commerce, the distinction between commercial companies and civil companies was made according the same criterion which is used to differentiate merchants from non merchants. Was considered commercial the companies engaged in commercial activities, ie, the performance of commercial acts, as a regular profession: ex. industrial companies, banks.... etc. A civil company was the one engaged in civil activities as a regular profession: ex. agricultural companies...etc. This means that the distinction was made according to the object of the company. If the object was commercial, the company would be considered commercial.
Commercial and civil companies 7 The distinction between civil and commercial companies is of great importance: Civil companies are governed by the rules of the civil code (art. 505 to 537), while commercial companies are subjected to rules of the commercial code, and company laws complement by rules of the civil code. Commercial companies are bound to perform all the duties of a merchant. They could be declared bankrupt as any other merchant. Members of a civil company are liable for all the debts of the company. But in a commercial company the liability of its members is different according to the type of the company. For example the liability of members of a partnership is unlimited, while the liability of a shareholder in a company limited by shares is limited...etc. Commercial companies should be registered in the register of commerce and their statutes must be publicized, while civil companies can be established without registration or publicity.
Commercial and civil companies 8 Under the new code of commerce issued by the law n° 17/1999, a company is considered commercial if it assumes one of the forms prescribed the laws regulating companies, without any consideration for the object of the company Accordingly, are commercial by virtue of their form: the partnership, the limited partnership, the joint stock company, the company with limited liability and the partnership limited by shares. After 1999 Civil = Commercial companies
Companies of Persons and Capital Companies. 9 Commercial companies are divided into two major categories: companies of persons and capital companies. This distinction is not based on any difference in form or object of the company. It is mainly based on a difference in the relative importance given to the identity and personality of the members of the company in the legal organization of the company. In the companies of persons, the identity and the personality of members are crucial. The company is based on what is called the personal consideration. Hence the death of any member leads to the dissolution of the company. On the other hand, the interests representing the members' share in the capital of the company are not negotiable. This means that the companies of persons are, in principle, closed companies. The partnership is considered the ideal type of companies of persons.
Companies of Persons and Capital Companies. 10 The capital companies are not based on the personal consideration, but rather on the capital consideration, One can say that it is the association of capital and not association of persons that is central to these capital companies. In a capital company, as a general principle, the personality of the company is completely distinct and separate from the personality of its members. The company is not affected in any way by the death or the withdrawal of any of its members. The "shares", representing the contributions to it capital by its members, are negotiable. This means that a capital company is- in principle- an open company.
Companies of Persons and Capital Companies. 11 In any case, one should remember that the two concepts of the personal consideration, and the capital consideration, are relative and not absolute concepts. In a company of persons, members may agree to introduce the capital consideration to a certain extend; for instance by allowing members to sell their interests to outsiders. Similarly, members of a capital company may introduce a certain degree of personal consideration, for instance by restricting the negotiability of the shares.
Companies of Persons 12 a The partnership This is the ideal type of companies of persons. In this company, all the partners are jointly and personally liable for all the debts of the company. Every member is considered a merchant. b- The limited partnership. In this company there are two categories of partners. There are the general partners who are personally and jointly liable for all the debts of the limited partnership. There are also the limited partners who have a limited liability for the debts of the company. To these two companies, we should add a third type of companies of persons.
Companies of Persons 13 c-The mohassa company or, the silent partnership: This company is called in France societe en participation. This company is not registered and has no legal personality and hence cannot be considered a company having a distinct form. It has purely contractual nature. It exists when two or more persons bring together capital, or services, with view to carrying on a common activity, and sharing profits and losses. The existence of the company is not revealed vis-a-vis third ` parties; it is only the arraigner representing the company vis-a-vis third parties, who is liable for all the debts of the company
Companies of capital 14 A- the joint stock company It is the company whose capital is divided into shares of equal values and where the shareholders are liable for the losses of the company to the extend of their contributions to the share capital. The shares issued by this company are negotiable, which means that the shareholders have the right to withdraw from the company at any time. B- the limited partnership by shares In this company there are two categories of partners. There are the general partners who are personally and jointly liable for all the debts of the limited partnership. There are also the shareholders who have a limited liability for the debts of the company.
Companies of capital 15 c- The company with limited liability, la societe a responsabilite limitee. This company is created by a limited number of members. This number cannot exceed fifty. The liability of the members is limited to the extend their contribution to the capital of the company. Contributions to the capital are not represented by shares, but by interests. The transfer of these interests is restricted.
Company legislation applicable: 16 Companies of persons are still governed by articles of the trade law of 13 November 1883 (The old code of commerce). In fact art 1 of the law n°17, 1999 promulgating the new code of commerce declares: "The trade law promulgated by the royal Edict of 13 November 1883, with exception of chapter 1 of Part 2 thereof, shall be superseded and shall be substituted by the attached law". The capital companies are regulated by the law n°159/1981. The civil code, being in a way the common law with regard to all companies, continues to apply wherever there is lacuna in company law. Articles 505 to 537 of the civil code define the company contract and regulate the legal personality of the company, its management, its desolation and its liquidation.
The company contract 17 The elements of the contract General elements Consent Capacities of the parties Lawfulness of the object Lawfulness of the cause Specific elements a- Association of two or more members b- Contributions to the capital of the company. In money In kind In service The intention to cooperate actively Formal elements a- The contract should be made in writing. (b) The contract should be published.
I - The general elements of the company contract 18 Consent. The contract must be made by the free consent of the parties. The consent must be free of any vitiating element such as mistake, fraud, or coercion. If the consent is vitiated, the contract will be considered as voidable; ex. If one of the parties was mistaken about the form or the type of company, thinking that the company is a limited partnership, while it is in fact a partnership.
I - The general elements of the company contract 19 Capacity of the Parties. The parties must be competent to contract. The capacity required her is the capacity to assume obligations. Hence, a minor, or a person of unsound mind cannot be a party to a company contract. This is the general rule. But since a partner in partnership is considered a merchant, he must have the commercial capacity, which means that he must have attained the majority and must be of sound mind. A minor is not entitled to contract a partnership, otherwise the contract will be voidable.
I - The general elements of the company contract 20 The difficulty arises when a minor inherits an interest in a partnership, and where the contract allows for the continuation of the partnership with the heirs of the deceased partner. To admit the minor as a partner in this case, would violate the rules of capacity. In Egypt, it is generally accepted in this case that if the minor has attained 18 years of age, he may be allowed by a court order to continue as a partner in the partnership. In such case he will be considered a merchant and may be declared bankrupt. A minor of less than 18 years of age may also be authorized by court order to continue as a partner in such partnership through his legal representative
I - The general elements of the company contract 21 Lawfulness of the object. The object of a company is the economic activity that the company was created to carry on. One should distinguish between the object of the contract and the object of the obligation of the member. The object of the obligation of the member is..the contribution in money, kind or service to the company. The object of the company must be lawful. If it is unlawful the company contract will be void. The object is unlawful, if it is contrary to public order, immoral, or forbidden by the law. A company is not allowed to carry on activities that are not within the scope and limits of its object. The company is not bound by any contract that is not within such limits. Lawfulness of the cause. The cause of the company contract is the intention to make profits. As such it is always lawful.
II - The specific elements of company 22 a- Association of two or more members The company is an association of two or more persons. Thus, there can be no company consisting of a single person is Egyptian law. Any person, individual or juristic person, can enter into a company contract. If for any reason a company is left with only one member, it should be terminated and liquidated. However there is an exception to this rule. If for any reason the number of members of a company limited by shares has fallen below the minimum required (which is three), the company is not immediately terminated. It is given six months in order to correct this situation and get back to the minimum required. The same apply to the other capital companies. Finally there is a no maximum to the number of members except for the company with limited liability, where there is a maximum of fifty members.
b- Contributions to the capital of the company. 23 Each member must make a contribution to the business. The contribution may be in property (in money or in kind) or in services. The contributions of the members may not be of the same nature or the same value. One member may make a contribution in money and another in services. But all the members may not make contributions in services only. There must be at least one contribution in money or in kind, since the company needs capital in order to start its activities.
b- Contributions to the capital of the company. 24 The contribution in services, while giving the member a share in the company's profits, is not considered part of the capital of the company. Capital in the legal sense only embraces property and not mere skill or industry. Art. 508 of the civil code establishes a presumption according to which the contributions made by the company members are equal in value unless otherwise decided by the contract. This means that if the company members did not evaluate their contributions in the company contract, these contributions will be considered equal in value.
Kinds of contributions 25 1- contribution in money. If a company member undertakes to make a contribution in money, he should perform this obligation at the fixed time. If he fails to performs his obligation, he is liable to pay interests as of the day the payment was due. He may be also liable to pay damages if necessary. The contribution in money may consist in a debt due to the contributing member by a third party.
Kinds of contributions 26 2- The contribution in kind may consist in the transfer of all the property rights to the company. In this case the transfer of ownership from the member to the company should take place according to the dispositions of the law regarding the sale- contract, and in particular the formalities of registration.. The contribution in kind may consist only in the transfer of the beneficiary rights to the company. In this case the operation shall be analyzed as a lease agreement between the contributing member and the company, regulated by the dispositions of the law with regard to such act.
Kinds of contributions 27 C- contributions in services (or industry) A company member may offer his services as a contribution to the company business. Financial, technical, administrative expertise may be offered as a contribution services. The services offered should be of a certain importance and have a bearing on the object of the company. But a contribution in services cannot consist in simple social or political influence. If a company member presents his services as a contribution to the business, he may not perform the same services on his own behalf or on behalf of a third person. Every company member is bound by an obligation of non-competition. Contributions in services are not allowed in the company limited by shares or in the company with limited liability.
Capital of the company. 28 Although every member of the company must make a contribution in money, in kind or in industry to the undertaking, capital in the legal sense only means property and not mere skill or services. Only the contributions in property (in money or in kind) constitute the capital of the company. The concept of capital is related to the concept of legal personality. A company which has no legal personality cannot have capital, even though there are necessarily contributions in property made by the members. This is the case of the silent partnership. Capital represents the value of the contributions ' made by the company members. It is a fixed value. By assets we mean the total property of the company at a certain point in time. The value of the company's assets changes from time to time, in relation with the development the company's activities, and depending on whether the company has realized profits or losses.
c- The intention to cooperate actively 29 company contract implies necessarily the existence of a certain spirit of cooperation among the different parties to the contract (the members of the company). The members are supposed to cooperate actively and on equal terms to realize the purposes of the company, with a view to share the profits or the losses of the business. From the above it is clear that the intention to cooperate implies the following : 1. Each member must cooperate actively with other members to achieve the purposes of the company. 2. This cooperation must take pace on equal terms. 3. This cooperation must take place with a view to share the profits or the losses of the business.
Company versus co-ownership 30 This intention to cooperate actively as a constitutive element of the company contract allows us to distinguish company contract from other relationships. This is the case for example of the co-ownership. Co- ownership is the relation which subsists between persons who own property jointly or in common. Co-ownership is not a company. First in a company, members always intend to carry on some business and to cooperate actively for that purpose, while co- ownership does not carry with it any idea of business or active cooperation. Second, in co-ownership every co-owner owns an indivisible part of the property, while in a company the contribution in property made by the members become the property of the company and cannot be alienated by the members.
c- The intention to cooperate actively 31 The "affection societaties" implies necessarily that all members should share the profits and losses of the business. The sharing of profits is an essential feature of the company where no one of the members is entitled to the whole of the profits or can be exempted from losses. Hence the company contract cannot contain any clause that excludes any member from sharing the profits or exempts him from bearing the losses; otherwise the contract will be void. But the affection societaties" does not imply that all members should share profits and bear losses equally. It does not also imply that the profits and losses should be shared in proportion with the capital contributions of the members of the company. The members are free to determine how the profits and the losses are shared. If the contract does not contain any clause to that effect, the profits and the losses should be shared in proportion with the capital contributions of the members.
III- The formal elements. 32 a- The contract should be made in writing. 30 - Art. 507 of the civil code states that, "the company contract should be written, otherwise it is void.Also will be considered void any modification of the contract which is not made in the same form of the contract. From the above it is clear that the written form is a constitutive element of the company contract, and not merely a means of evidence.However, this form is not required for "al mohassa company" the silent partnership. A mohassa company contract is valid even if it is not made in a written form. The reason is that such company is not registered and is not considered a legal person (a juristic person). If the contract is not made in a written form, it will be considered null and void. But nullity here is of a very specific nature. The company members cannot sue for nullity against a third party. But a third party can claim nullity of the contract vis-a-vis the company members. Any amendment of the contract should also be made in writing otherwise the amendment will be null and void.
III- The formal elements. 33 (b) The contract should be published. According to Art of the civil code, company is not considered a Juristic person vi s -a-vis a third party unless the proceedings of publication are fulfilled. But civil code did not specify the proceedings of publication. On the contrary the commercial code has clearly defined the proceedings of publication, and the legal sanctions in case of non publication. These proceedings are not the same for all types of companies. The legal sanction of non publication is also different in each case.
Company versus co-ownersgip 34 This intention to cooperate actively as a constitutive element of the company contract allows us to distinguish company contract from other relationships. This is the case for example of the co-ownership. Co- ownership is the relation which subsists between persons who own property jointly or in common. Co-ownership is not a company. First in a company, members always intend to carry on some business and to cooperate actively for that purpose, while co- ownership does not carry with it any idea of business or active cooperation. Second, in co-ownership every co-owner owns an indivisible part of the property, while in a company the contribution in property made by the members become the property of the company and cannnot be alienated by the members.
The theory of nullity 35 Different types of nullity Relative nullity Void consent Lack of capacity Absolute nullity Object is unlawful Lack of one of the specific elements The specific nullity
The meaning of nullity 36 If any of the substantive or formal elements of the company contract is missing or contains a vitiating element, the contract will be considered null and void. Nullity may be absolute or relative, according to the general principles of civil law. But with regard to company contract, there is a third type of nullity that has characteristics of both the absolute and the relative nullity.
(a) The relative nullity. 37 If the consent of any party to the company contract is vitiated by mistake, fraud, or coercion, the contract-will be voidable. This means that that the nullity here is relative. Only the member whose consent was vitiated has the right to sue for nullity of the contract. The same solution should be followed in case of lack of capacity of any of the parties to the company contract. The contract will be considered voidable at the option of the incapable party.
(a) The relative nullity. 38 The contract will be considered null and void with regard to this member alone. As for the other members, the answer will depend on whether the company is a company of persons or a capital company. In case of a company of persons the avoidance of the contract vis- a -vis one member will lead necessary o the nullity of the whole contract and the dissolution of the company in accordance with the theory of de-facto company. On the contrary, in a capital company avoidance of the contract vis- a -vis one member does affect the existence of the company itself.
(b) Cases of absolute nullity 39 I -The object is unlawful If the object of the company is unlawful, the contract will be null and void. Nullity here is absolute. The company members as well as any third party can sue for nullity. The void company is considered as if it has never existed. If the company was nullified before starting its activities, the members' contributions are recoverable. If the company was nullified after it has already started its activities and realized profits or losses, these profits or losses should be distributed among the members in proportion with their capital contributions. A third party is entitled to claim nullity of the company for unlawful object vis- a -vis the company members, since the nullity is absolute. But the question arises whether the members can claim nullity vis- a -vis a third party, in order to nullify a subsequent transaction between the company and the third party. The prevailing opinion is that the members are not entitled to claim nullity vis-a-vis a third party in good faith, who did not know that the company was void.
(b) Cases of absolute nullity 40 II- The company is lacking one of the specific substantive elements of the company contract If a company was created by one single member the contract would be null and void. This will be also the case of a company in which one of the members was exempted from contributing to its capital. The company contract will be considered null and void. if it contains a leonine clause. By leonine clause it is meant any clause of the contract which excludes one member from sharing the profits or the losses of the company. Also is considered leonine any clause which one member to monopolize the totality or the quasi-totality of the profits of the business.
The specific nullity 41 In principle, nullity has retroactive effect. A void contract should be considered as if it has never existed. But in the case of company contract the principle of retroactivity of nullity is not applied without certain limitations and exceptions. The reason for such limitations lies in the fact that the company contract creates a juristic person. If a company is declared void after a certain time of its creation it would be very difficult to put aside all the legal effects of the existence of this juristic person. To apply strictly the The principle of retroactivity in this case, will result in the total destruction of the legal relations to which the juristic person was party, and into the disruption and destabilization of the legal and economic order. For all these reason the doctrine and the jurisprudence introduced certain limitations to the principle of retroactivity of nullity when applied to company contract, by inventing a new concept, namely the " societe de fait or the "de-facto company".
The specific nullity 42 The theory of the "societe de fait" (The de facto company) is based on practical considerations. The idea is that if nullity can annihilate the legal existence of the company, it is nevertheless impossible to neglect the de facto existence of the juristic person in the past. Before nullity was declared, the juristic person has existed, has performed certain activities and made transactions with third parties. These transactions have created rights and obligations which cannot be ignored. In a few words the juristic person has had a de facto existence which should be taken legally into consideration. The societe de fait" was created by the Doctrine and the Jurisprudence in order to conciliate the principle of the retroactivity of nullity of contracts with the specific nature of the company.
The specific nullity- application 43 It is to be noted here that the theory of the de-facto company will apply only in cases of relative and specific nullity. In case of absolute nullity, the company will be considered null and void with retroactive effect, which means that the company will be considered as if it has never existed. If the company contract is not written or published, it will be considered void. But this nullity has very specific features. Any member can claim nullity of the contract visa-vis other members. In such case the nullity has no active effects. The company is considered as having existed in the past, from the time the contract was set up to the time the nullity was declared by the court. The members are not allowed to claim nullity of the contract vis- a -vis third party. But a third party can claim the nullity vis- a -vis the company members. The court cannot nullify the company unless it is demanded to do so by an interested party.
44 Consequences of juristic persons A legal person Separate patrimony CapacityName DomicileNationality
1- An independent legal person 45 The autonomous legal personality of the company is clearly established by art. 506 of the civil code. According to this art., a company, as of its formation, is considered a juristic person, having its own independent legal personality separate from the legal personality of each of its members. This means that the company is at law a different person from the parties to the company contract. It is a distinct legal entity. It is of course a creation of law and is called artificial person, being invisible and intangible. It has individuality, has the power to. sue and c sued in its own name, has the right to hold and alienate its own property and has the right to enter into contracts with third parties in its own name. But since a company is a person created by law, it can only pursue its activities through natural persons acting as its agents. Except al mohassa company "the silent company”, all other types of companies acquire the legal entity with all its attributes.
1- An independent legal person 46 Except al mohassa company "the silent company”, all other types of companies acquire the legal entity with all its attributes. According to art. 506 of the civil code, a company is considered a juristic person once the formation of the tact is completed. But vis- a -vis third parties the company cannot be considered a legal person unless the contract was publicized However, the joint stock companies, the limited liability companies and the partnerships limited by shares acquire the legal personality only after,being registered in Register of Commerce. A company is considered a legal person during its contractual term and until its dissolution. Even after dissolution the company will continue to have a legal personality during the liquidation period. But it is a limited legal personality, because it is recognized by the law for the sole purpose of liquidation and to the extend necessary this liquidation.
2- Patrimony 47 Patrimony means the mass of financial rights and obligations of a person. Every legal person (individual or juristic person) has a patrimony. As a juristic person, a company has its own patrimony separate from the patrimony of each of its members. Consequently, a company owns its property. The assets of a company do not belong to its members. The contributions in property made by the members become the property of the company, and part of its assets. The only interest which the members have in the assets of the company is an indirect one, through the medium of their interests or shares. On the other hand: the personal creditors of the members are no creditors of the company and they have no recourse against the company for payment of their debts.
C- capacity 48 As a legal person, a company has the capacity to (to acquire rights) and the capacity to exercise these within the limits of its object. Consequently a company has the capacity tp make only the transactions for the realization of its object. It may not deviate that object. A company has also the capacity to obligate itself, contracts or torts... etc. As for the penal responsibility, it is the general agreement that a juristic cannot be considered liable from a penal point of view. A juristic person an invented person a d cannot conceivably be submitted to penal punishment.
D- Name 49 Every company must have a commercial name that distinguishes it from other companies. With regard to companies of persons (ex. partnerships or limited partnerships) the company's name must be composed of the name or names of one or more of the partners. On the contrary a joint stock company's name must be derived form its objective. The company with limited liability can have a name derived from its objective or from the name of one or more of its members.
E- Domicile 50 As a juristic person a company must have its own domicile, that is independent from the domicile of any of its members. The domicile of a company is the place where the management head- quarters is located, and where it performs its legal activities. With regard to the companies of persons, the domicile is where the manager perform his activities. With regard to joint stock companies the domicile is where the board of directors and the general assembly of shareholders meet. It is obvious that when locating the domicile of a company, one should consider the real management head quarters and not the one fixed by the company's contract. It is the former head-quarters which should be considered when determining the domicile of the company. The domicile of a company serve to determine the competent court when the company is sued. It is also the face where all legal notices should be addressed to the company.
F- Nationality 51 A company, as a juristic person has a nationality. A company is considered Egyptian when its domicile is based in Egypt. Consequently it can enjoy all the rights that Egyptian law grants to Egyptians, including diplomatic protection when working abroad.
52 Cases of the company dissolution The general cases Dissolution by expiration of term Termination of the undertaking Loss of the company's assets. Termination by agreement Reduction of the number of members below the minimum required Merger The specific cases Death of a member Bankruptcy, Insolvency or Incapacity of a member Withdrawal of a partner Dissolution by court order
1- Dissolution by expiration of term. 53 If a company is formed for a fixed term, it is terminated oy the expiration of that term, even if the undertaking or the venture of the company was not ye-terminated, unless the contract included a clause of automatic renewal. Needless to say that the company members have the right to renew the company contract by unanimous agreement before the expiration of the original term. If the fixed term expired, but the company members continued to perform the same company's activities, the contract will be presumed renewed for a period of one year. But the renewed company will be considered a new one formed under the same contractual conditions of the expired company.
2- Termination of the undertaking object 54 If a company was formed for a certain determined object or undertaking, it will be dissolved by the implementation of such venture or undertaking. If after the implantation of the venture the members continued to form the same kind of activity, the company contract will considered renewed for a period of one year.
3- Loss of the company's assets. 55 If a company looses all its assets or the major part them, it should be terminated; for ex. if fire destroys the tel exploited by the company. But if the company was ured against such losses, there is no dissolution.
4- Termination by agreement 56 A company may be at any time terminated by tnimous agreement of its members, or by the majority if wed by the company's contract.
5- Reduction of the number of members below the minimum required: 57 Where the number of members is reduced below 3 in the case of a joint stock company, and below 2 in case of other companies, the company should be dissolved. However the law n,159/1981 concerning capital companies has introduced an exception to this rule. According to art. 8 of this law, if the number of members of the company falls below the minimum required, the company will be dissolved, unless it proceeds within six months to the completion of such minimum.
6- Merger 58 In case of merger by absorption the absorbed company is dissolved. In case of merger where two companies are combined into a new company, the two joining companies are dissolved.
1- Death of a member. 59 Every company of persons is dissolved by the death of any member, unless otherwise stipulated by the contract. But usually the contract provides that on the death of a partner the company may be continued by the survivors either alone or in partnership with the heirs of the deceased partner.
2- Bankruptcy, Insolvency or Incapacity of a member 60 Any partnerships is dissolved by the bankruptcy insolvency of any partner. This will be also the case if partner looses his commercial capacity ( ex. in case of mental disorder).
3- Withdrawal of a partner 61 If a company of persons (partnership for ex.) is created for an undefined time, any partner can withdraw by giving notice to the other partners. In this case company is dissolved unless the contract provides for continuation of the company by the remaining partners. But if the company was established for a fixed term, partners cannot withdraw before the expiration of such term. However a partner may withdraw by court order, only if the withdrawing partner has reasonable causes for such withdrawal.
4- Dissolution by court order. 62 If demanded by a partner, the court has power order the dissolution of the company: If another partner commits a breach of the agreement by refusing to perform his obligations. For any other reason that is considered -in the opinion of the court- as justifying the dissolution; for instance if there is an economic crises which makes it impossible for the company to continue to operate without heavy losses.
Liquidation 63 Liquidation of a company can be defined as "all the acts that are performed with a view to wind up the current business operations, to collect the debts due to the company, to pay the debts due by the company, and to distribute the remaining assets". In principle, the liquidation should take place according to the rules established by the company's contract. If the contract was silent on this issue, the rules established by art of the civil code should be applied.
A- The company retains its legal personality during the liquidation period 64 Art. 533 of the civil code declares the dissolution of the company entails the termination of the mandate of the managers. The company's legal personality is maintained only to the extent necessary for, and within the limits required by, the liquidation". This means that the company's legal personality is not Disappeared by the winding up of the company. During the Liquidation period the company will still exist as a juristic person. The reason is that without such personality it would impossible to carry on the operations which are tssary to liquidate the company.
A- The company retains its legal personality during the liquidation period 65 In fact, during the liquidation period the business operations have to continue: company has to collect its debts. to sell the stocketc. about legal. personality,-- such acts could only be formed by the unanimous agreement of the members, ch is not always easy to achieve. Consequently: 1- the company retains its separate patrimony. 2- It also keeps its own domicile; 3- It can sue be used through the liquidator; 4- The liquidator, being representative of the company, can sell immovable and immovable property of the company; 5- If the company stops ring its debts it can be declared bankrupt
B - The nomination of the liquidator 66 Once the company is dissolved, the authority of managers is terminated. The company is henceforth resented by the liquidator. Usually it is the company's contract that regulates the question of the nomination of the liquidator. If not, the members may appoint the liquidator by a majority decision. The liquidator may be chosen among the members. If the members could not agree on the person of the liquidator, he may be appointed by the court upon request filed by any of these members. (art.534/2 civil code). If the company – for any reason- was declared void, it is the court that appoints the liquidator.
C- The powers of the liquidator. 67 The liquidator is considered an agent of the company. Accordingly, his position is not different from a manager. But his powers are different. These powers should be determined by the authority that appointed him (the members of the company or the court). In any case he cannot act beyond the powers entrusted in him. If he goes beyond the limits of these powers, the company is not bound by his acts. If his powers were not explicitly determined, he may perform all acts that the liquidation requires: 1. He can sue on behalf of the company and can be sued in the name and on behalf of the company. 2. He can sell properties of the company. 3. He can carry on the business of the company so far it may be necessary for the beneficial winding up of the company. 4. He can borrow in the name and on behalf of the puny, if this was necessary for the liquidation of the 5. He can collect the debts due to the company and those due by the company. 6. He can do all other acts as may be necessary to d up the company.