Selected types of companies within the scope of commercial laws

Introduction

Commercial law can be defined as a group of legal statements and rules that control and decide the duties and rights of engaged parties within a specific business or trade and they govern any arising disputes between sellers and buyers caused due to any transactions between them and those legal rules can settle some issues related to insurance, banking, affreightment or any other relevant issues. The commercial law concerns different types of companies such as the general partnership as there are rules for determining this partnership related to properties, ownership and the sharing process of gross related to such a partnership. Being a partner means that the person is legally engaged within a partnership. It is important when two parties make an agreement or more than two persons, to have within natural or legal persons as natural persons are those whose age is not under 18 years old who have judicial permission. This shows how far the commercial law is important and needed for general partnerships. Commercial law also cares for issues related to limited partnership which is a type of commercial partnerships resembles general partnership but the limited partnership must include one general partner at least and one limited partner at least while the general partnership includes two general partners at least. The commercial law controls how the general and limited partners can manage control, share in the rights of using the partnership property and having different liabilities for the partnership debts. A joint venture is a company or a business agreement between two companies or more than two and they agree to develop a field of business for a period of time that may be limited to form a new business company by the joint venturers financial contributions. The new business entity is controlled by the joint venturers and both of them share the revenues and expenses of the new companies. Joint ventures are made between individuals, companies or both. They may be small or major projects. A limited liabilities company is a business organization that has members who can't be personally held liable for the liabilities or debts of the company. This type of company represents a hybrid entity that has different characteristics of different companies such as those of a corporation and a partnership or those of sole proprietorships. (RSM, 2016)

A general partnership is a company that has a legal character and responsible partners who are working together and have direct and unlimited responsibility. Commercial law deals with this type of companies to control their business and relevant activities. A general partnership is established for purposes of practicing a business with a specific trade name. It should have a partnership agreement that is registered with the related ministry such as in Oman, the Ministry of Commerce and Industry. In Oman to start a general partnership, there should be a capital minimum which is 3.000 RO. The general partnership partners are liable to the debts of the General partnership as long as they are related to the company's property. A general partnership depends on the commercial law which gives each partner the right to act in an independent way as well as be able to pool resources, avoid big formalities and avoid high startup costs. The partner in such a company has to accept some resources and time not equal contributions as he has to trust the other partner business judgment and be fully responsible for the liabilities and debts of the business in spite of the risks involved in this. Each individual in such an agreement has to realize that there are no person to govern the other's decisions without stated terms about this in the agreement and that any partner is able to enter in a binding contract on behalf of the other partner. This makes it hard for partners to make a decision-making policy that is strong in such an organization. (Richmond, 2016) The joint venture is an arrangement based on a contract between two ventured parties and they have to agree on the governing terms and conditions written in the agreement. The two parties can make an equity joint venture through establishing a company that is owned in proportions that are known and agreed on by some specific funded subsidiaries or by purchasing equity in a company that already exists. The new business entity can be a limited liability company or a corporation or any other form that is applicable to the commercial law. The equity joint venture is usually made for collaborations that are closer and on long terms and they have higher levels of investment. Equity joint ventures are sometimes more difficult than others to be wind up as they are based on contractual agreements that are terminating and also the parties involved within it prefer to liquidate the assets which can be time-wasting. A joint venture involves terms that govern the mutual relationship between the involved parties.  (Stewart and Maughn, 2011)

The current assignment is discussing four types of companies that are ruled and governed by the commercial law which are the general partnerships, limited partnerships, joint ventures and limited liabilities companies. The assignment presents general and special characteristics of two main types of them which are the general partnerships and joint ventures. It discusses how these two types of companies are formed, liquidated and managed in accordance to the Omani commercial law. The paper is explaining the processes and procedures of how those two types of companies handle disputes and discussing issues and differences that arise in those companies. This is concluded and summarized to focus on the most important points in the assignment.

Discussion

There are different characteristics for general partnerships such as the fact that a general partnership is consisted by two entities or even two individuals or more than two. There can be two great corporations that can form one partnership when those great organizations agree to establish a new business entity by the two corporations. Forming a general partnership requires the business to be unincorporated and intending for making profits. There are unincorporated requirements such as the formalities the entity should have for forming the corporation that shouldn't be the partnership as the law related to the partnership is limited and not supporting high profits for the business. The partnership law is involved within the commercial law as a subcategory. Yet corporations for example are not in need for formation to find more profit. Sharing profits should be agreed by the two parties and such agreement makes a kind of a rebuttable presumption that confirms that the partnership existed. General partnership agreements should be written, the agreement has to identify the partners, their relevant duties, their responsibilities, respective business and the shared income by each partner; it should also define times for ending the partnership and all important details related to the business. There are capital partners who form a general partnership and those are the partners who agree to provide money and there can be labor partners who provide work.  In the general partnership all the partners are individually liable.  The general partnership can be useful for the two parties if the business is successful but it can lead to different problems if the business is a failure. Many problems are reasons for disputes about which party should bear the loss burden obliged by the partnership. (Manolov, 2013) Joint ventures refer to a wide group of commercial arrangements that are held between two or more entities that are separated as each party is considered an entity and provides resources to the venture to create a new business that collaborates the parties together and share profits as well as risks that are involved within the venture. Any party within the joint venture can present the land, the intellectual property, equipment and human resources or other assets. Each party should have a specific expertise that is relevant to the business and its development and this should be decided and agreed by all parties. It is important to have a shared vision between the parties and this should also include the objectives of the joint venture. It is necessary to realize the involved risks within joint ventures and the fact that the jointly managed and owned business can be well risk managed and mitigated through realizing its benefits and how to employ different services to serve that business and raise its revenues. There are reasons for establishing joint ventures such as the same business objectives of the two parties and the different shared views of different business activities. Joint ventures have to face different challenges and find creative solutions to them such as making the management as close as possible to the business management issues and both interests of needs of the both parties should be regarded and considered.  (Beamish and Lupton, 2009)

To form a general partnership in Oman, it is important to get the agreement of the two or more included parties and this should be done legally and according to the Omani law. They should be jointly and severally liable to the association obligation based on the Omani commercial law and this to the full extent of their own wealth. Participation in the general partnership has no limited maximum but all the general partnerships must be registered in the Omani commercial registrar. The agreements that form the relationship among the general partnership parties must bear the name of one or two of them showing that there is a partnership between them. General partnerships are managed through development upon all the partners unless there are other terms indicating management and should be written in the agreement. All acts can be performed by managers. All acts that managers perform should apply to the objectives of the agreement and the partnership based on the limitations that the agreement considers and the limitations that the Omani commercial law puts. Liquidation of general partnerships can be as a result of different reasons that should be specified in the association memorandum of the partnership and according to the Omani commercial laws. Liquidation and dissolution can be done based on death, withdrawal, bankruptcy or declaration of insolvency of one of the partners. Dissolution can also occur when there is a filature of one of the partners in accomplishing the assigned agreed obligations to him. It may also occur at expiration of the partnership term. (Al Alawi & Co., Advocates & Legal Consultants, 2016)   In Oman joint ventures are formed based on the Omani commercial law and the terms refer to the joint ventures there. They can be formed according the agreement by two companies who want to submit a joint tender in Oman where cooperation is the main objective of the two companies to present a new company where each of the two companies can execute different certain parts of a project provided by the joint venture. The two parties of the venture in Oman have to decide the ways for determining their relationships during the period of the venture. This is done via the joint venture agreement.  Joint venture in Oman is managed according to the agreement of the JV and this refers to all relevant affairs. Management in joint ventures can be done by any member of the venture. Liquidation can be done without any juristic personality; therefore, no question of liquidation. However, the JV Agreement can be terminated as per contractually agreed provisions. According to the Omani commercial law, the joint venture shall not have any legal connections with a third party except in case that there is a contractual relationship between the two main parties of the venture and a third party. (Hubbard et al, 2012)

General partnerships are controlled and governed by the Omani commercial law that can help them when there are disputes, issues and differences as the law depends on the rules that are set in the agreement of the partnership determined by the partners. Governance rules that the partners of the general partnership determine can differ from those set by the Omani rules and then the Omani law practices deal with the issues based on such rules of the partnership. For example; according to Article 42 from the Omani commercial law, a partner who withdraw from the partnership and this causes the latter’s dissolution must be responsible for compensating other partners for the damages caused by his withdrawal if it constitutes a breach of the partnership’s Memorandum of Association. Withdrawal from a partnership established for an indefinite period is not considered as a breach of the partnership’s Memorandum of Association. Agencies can be used as legal representative for the entity or a person and partners can ask agencies for processing disputes and issues of differences. This can be done via a contract between the partner and the agent. Partnerships are able to grant certain authorities to specific partners on condition that the grant exists in the partnership document. Without an agreement to any partners can bind the partnership without asking the consent of the other partners. (Bartos, 2016) Disputes related to joint ventures can arise in any stage of cooperation of the two parties and they can cause failure of the project. Disputes can arise then about sharing profits or any other reasons. Disputes may also arise over management and this can lead to tension in the organization between parties and may lead to great loss and failure. Bankruptcy of the joint venture can be another reason for legal disputes. Accusations can then occur and legal advice is needed. Dishonesty and fraud allegations can also cause disputes where the partners are in need for civil remedy. Arbitration agreements are also used here as they can be more effective in dealing with practical issues. An arbitration office or institute can be asked and there is a freedom for parties to choose the arbitrators who have to be from a relevant industry sector. International commercial arbitration can also be sought but to control disputes based on the limitations of the Omani law. (Mofcom,2016)

Conclusion

In conclusion, it is important to confirm the need for understanding different types of business entities and entrepreneurships in Oman as this can help understand the need for them, how they are formed and managed and other important issues that can help businessmen in their work or those who intend to start a business in Oman. It is important to understand how these companies are dealt with, liquidated and dissolute as well as understanding and recognizing the different articles of the law related to them. In Oman it is the commercial law that controls and decides different issues relevant to these companies as discussed above. There are four main types of entities referred at in this paper which are the general partnership, limited partnership, joint ventures and limited liabilities companies. There are two discussed in details which are the general partnerships and the joint ventures. The discussion about the two types refer to the main information about the two types of companies, why they are established and how and what law and legal advice can be used and sought in related with important issues about them. The two types of companies are presented, discussed and explained in relation to the way they are formed, liquidated and managed. There is also an overview of the way disputes, differences and legal issues are dealt with in each of the two types. For general partnerships; the formation depends on an agreement between two partners who should write an agreement and agree on management, money shares, profits and other important matters into the agreement in order to refer to it when needed. The general partnership can be managed through development upon the different partners of the general partnership unless there are certain conditions and terms involved within the agreement; this should be done based on relevant articles in the Omani commercial law. They are liquidated when there is death of each of the partners, expiry for the agreement or other different problems that may lead to disputes between the two partners. A general partnership depends on the Omani law in solving legal problems, issues of dispute and difference in addition to referring to the terms and conditions in the written agreement as it can control different legal problems. Joint ventures differ from the general partnerships as a joint venture is a business of a new entity that is established between two entities that can be very large and they are also applicable to the Omani law except for certain issues. They are formed when two or more companies agree to join and present a new venture. There should be shared vision and value between parties and management are agreed on and can be for any member of the venture unless specified. Joint ventures are liquidated when there is a fraud, a withdrawal by any of the parties or other reasons. They can ask legal advice for processing disputes and differences from the arbitration institutions that are found in Oman or those international arbitration institutions based on the limitations and legislations of the Omani law as well.