العربية• Company Formation
Companies built on personal trust between partners
In a general partnership, the partners are personally and jointly liable for the company’s debts, which may reach their own assets if the company’s assets are not enough. A limited partnership brings together general partners, who manage the company and carry that liability, and limited partners, who contribute capital, are in principle liable only up to their contribution, and do not take part in management.
• When does this form fit?
- Partners who share personal trust and experience in the activity.
- A family or trading business with a limited size and number of partners.
- A partner who provides funding without managing, alongside a partner who manages (limited partnership).
• The two types of partnership
General or limited partnership?
Partnerships are governed by the companies chapter of the Commercial Code of 1883, which Law No. 17 of 1999 kept in force, together with the Civil Code rules on the partnership contract. The difference between the two types starts with one question: are all partners liable without limit, or only some of them?
• Type one
General partnership
- Formed by two or more partners, all of whom are general partners.
- Each partner is personally and jointly liable for all of the company’s obligations, and may be pursued with their own assets.
- The firm name is made up of the name of one or more partners.
- Management lies with all partners or with a manager appointed under the partnership agreement.
- It rests on personal trust, so a new partner joining or a partner transferring their share is governed by the agreement and the partners’ consent.
- In principle, the company ends on the death of a partner, unless the agreement provides that it continues with the heirs.
When does it fit? A small number of partners who fully trust each other, each willing to carry personal liability for the business.
• Type two
Limited partnership
- It has two classes of partners: one or more general partners, and one or more limited partners.
- General partners manage the company and are personally and jointly liable for its obligations.
- Limited partners contribute capital and are, in principle, liable only up to their contribution.
- The firm name is made up of the name of one or more general partners; a limited partner’s name may not appear in it.
- A limited partner may not carry out acts of management, even under a power of attorney. One who does, or allows their name in the firm name, becomes jointly liable; giving advice or exercising oversight does not have that effect.
When does it fit? When one partner wants to provide funding without managing, alongside a partner who manages and carries the liability.
• What our support covers
How we handle the file
- Explaining the effect of joint liability on each partner before choosing the form.
- Comparing the form with limited liability alternatives.
- Drafting the partnership agreement: management, profit and loss sharing, and partner withdrawal.
- Following up formation and registration in the commercial register.
• Documents
What formation usually requires
- Partners’ details and identity documents, and whether each is a general or limited partner.
- The firm name, activity, capital and partners’ shares.
- A document for the registered office.
Documents vary by case and by the competent authority; we confirm the final list after reviewing your case.
• Common pitfalls
What can delay the file?
Choosing a general partnership without understanding that liability extends to personal assets.
A limited partner taking part in management, which may expose them to liability they did not intend.
An agreement that does not deal with a partner’s withdrawal or death, among the most common causes of disputes in these companies.
Choosing a partnership for an activity that the law or the regulator reserves for capital companies.
• FAQ
Questions we often hear before incorporation
What is the minimum number of partners?
Two partners.
Can a limited partner manage the company?
Management belongs to the general partners, and a limited partner who takes part in it may become personally liable.
Can we convert to a limited liability form later?
Yes, under the prescribed procedures, and we review the right route for the company’s situation.
• Related routes
Your file may also involve
• Your next step
Forming a company with partners you trust?
Send us your project details; our team will review them and contact you about the next step.
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