Provisions applicable to Business Organizations
Source : Commercial Code 1960

Book II  Business Organizations

Title I. General Provisions

Art. 210.─ Business organization defined.

(1) A business organization is any association arising out of a partnership agreement.

(2) Any business organization other than a joint venture shall be deemed to be a legal person.

Art. 211. ─ Partnership agreement

A Partnership agreement is a contract whereby two or more persons who intend to join together and to cooperate undertake to bring together contributions for the purpose of carrying out activities of an economic nature and of participating in the profits and losses arising out thereof, if any.

Art. 212. ─ Different business organizations.

(1) There are six forms of business organizations under this Code:

(a) ordinary partnership;

(b) joint venture;

(c) general partnership;

(d) limited partnership;

(e) share company;

(f) private limited company;

(2) Special provisions applicable to cooperative organizations may be prescribed.

Art. 213.─ Commercial business organizations.

(1) Any business organization other than an ordinary partnership may be a commercial business organization within the meaning of Art. 10 (1) of this Code.

(2) Where a commercial business organization is created in the form of an ordinary partnership or where the form of the organization is not specified, the commercial business organization shall be deemed to be a general partnership.

Art. 214.─ Formation to be in writing.

The formation of any business organization other than a joint venture shall be of no effect unless it is made in writing.

Art 215.─ Void provisions.

(1) Any provision giving all the profits to one partner shall be of no effect.

(2) Any provision relieving one or more of the partners of his share in the losses shall be of no effect.

Art. 216.─ Agents.

(1) A business organization shall acquire rights and incur liabilities by its agents in accordance with the provisions relating to agency.

(2) A business organization shall act in legal proceedings by its agents.

(3) Any summons to be served on a business organization shall be served at the head-office.

Art. 217.─ Dissolution under the law or by agreement.

Any business organization shall be dissolved:

(a) where its purpose has been achieved or cannot be achieved;

(b) where the partners agree to dissolution prior to the expiry of the term for which the business organization was formed;

(c) where the term for which the business organization was formed expires, unless the partners agree to continue the business organization.

Art. 218.─ Dissolution by the court.

(1) Notwithstanding any provision to the contrary, a business organization may be dissolved for good cause by the court on the application of a partner.

(2) There shall be good cause in particular where a partner seriously fails in his duties or becomes through infirmity or permanent illness or for any other reason incapable of carrying out his duties or where serious disagreement exists between the partners.

Art. 219.─ Publicity.

(1) Any business organization other than a joint venture shall be made known to third parties.

(2) Such publicity shall be made:

(a) by a notice published in a newspaper empowered to publish legal notices; and 

(b) by the deposit of two copies of the documents provided in Art.221with the official in charge of the commercial register; and

(c) by registration in the commercial register.

Art. 220.─  Publications of notice.

A notice under Art. 219 (2) (a) shall be published in a newspaper empowered to publish legal notices circulating at the place where the head-office is situated.

Art. 221.─ Deposit of documents.

(1) A deposit under Art.219 (2 (b) shall be made with the official in charge of the commercial register at the place where the head-office is situated.

(2) Two copies of the memorandum and all complementary documents, if any, shall be deposited.

(3) The official shall keep one copy of the documents deposited and shall send the second copy to the Department of the central commercial register provided in Art. 90 of this Code.

(4) Any person may, on payment of the prescribed fee, require the official in charge of a local or of the central commercial register to deliver to him a copy of all entries relating to a business organization.

Art. 222. ─ Registration.

(1) The application for registration in the commercial register shall be deposited with the documents specified in Art. 221.

(2) The provisions of Art. 95-99 of this Code shall apply.  The official in charge of the register shall examine whether the legal conditions relating to the formation of the business organization have been fulfilled.

Art. 223. ─ Effect of publicity.

A business organization shall have no legal existence nor personality until all the provisions of this Code relating to publicity have been complied with and registration is published in accordance with Art. 87 of this Code.

Art. 224.  Modifications.

(1) Any modification in the memorandum of association shall be deposited.

(2) Any modification of a fact published and registered, shall be published and the entry shall be corrected in accordance with Art. 108 of this Code.

Art. 225.  Branches.

(1) Where a business organization comprises branches or agencies situated in places other than the place where the head-office is situated, the provisions of this Code relating to publicity shall be complied with in each place where a branch or agency is situated.

(2) Registration in the commercial register shall be made by way of summary registration and shall refer to the principal registration.

(3) A summary registration shall contain the same particulars as a principal registration and shall show the address of the branch and the name of the manager of the branch.

Art. 226.  Cancellation of registration.

Where a business organization is dissolved and wound-up, the liquidators shall apply for the registration of the business organization in the commercial register to be cancelled.  The business organization shall have no legal personality after cancellation has been published in the Official Commercial Gazette.

Title II.  Ordinary partnership

Chapter 1.  General Provisions

Art.227. – Definition

A partnership is an ordinary partnership within the meaning of this Title where it does not have characteristics which make it a business organization covered by another Title of this Code.

Art. 228. – Joint ownership.

(1) The provisions of this Title shall not apply to joint ownership, where property is held by several persons for reasons outside their control.

(2) Joint owners may agree to create a partnership for the management of the property jointly owned.

Chapter 2.  Contributions

Art.229. – Nature and amount.

(1) Each partner shall make a contribution, which may be in money, debts other property or skill.

(2) Property or the use of property may form a contribution.

(3) Unless otherwise agreed, contributions shall be equal and of the nature and extent required for carrying out the purposes of the partnership.

Art. 230.  Guarantee.

(1) Where property is contributed, the contributing partner shall carry out the duties of a seller.

(2) Where the use of property is contributed, the contributing partner shall carry out the duties of a lessor.

(3) Where a partner contributes a debt, he guarantees only the existence of the debt and not the solvency of the debtor, unless otherwise agreed.

Art, 231.  Risks.

(1) Where property is contributed, the risks shall pass to the partnership in accordance with the provisions relating to sale.

(2) Where the use of property is contributed, the risks shall remain with the contributing partner.

Art. 232. – Interest.

Where money is contributed, the contributing partner shall be liable to the partnership for interest thereon where payment is made after the due date.

Chapter 3.  Management of the Partnership

Art. 233.  Modification of the agreement.

(1) The partnership agreement may be varied only with the consent of all the partners.

(2) The partnership agreement may contain a clause providing for the variation of a particular clause with the consent of the majority of the partners.

Art. 234. – Majority.

(1) Where the law or the partnership agreement provides that a decision may be taken by a majority of the partners, the majority means a majority of the individual partners.

(2) The partnership agreement may provide that the majority shall be calculated on a majority holding in the partnership.

Art. 235- Special acts.

The consent of all the partners shall be required for the appointment of an attorney or the carrying out of any act which goes beyond normal partnership practice.

Art. 236. – Appointment of managers.

All the partners shall have a right to act as managers, unless the partnership agreement or a decision of the partnership has appointed one or more of the partners or a third party to be the manager.

Art. 237.  More than one manager.

(1) Where several persons have been appointed managers and their duties have not been specified or where it has not been specified that they act jointly, they may each carry out acts of management.

(2) Each manager may object to dealings contemplated by other managers.

(3) The objection shall be decided on by a majority vote of all the partners.

Art. 238.  Joint management.

(1) Where joint managers have been appointed, decisions shall be taken jointly.

(2) Where an act of management is of an urgent nature and the other joint mangers cannot be consulted, one joint manager may act alone.

Art. 239. – Manager appointed under partnership agreement.

A partner appointed as manager under the partnership agreement may carry out all acts of management in disagreement with the other partners in the absence of fraud.

Art. 240. – Revocation of the statutory manager.

(1) The appointment of a manager appointed under Art. 239 may not be revoked or his powers restricted by the other partners, save for good cause.

(2) Where there is good cause, the appointment may be revoked notwithstanding any provision to the contrary in the partnership agreement.

(3) Gross breach of duty or unfitness to exercise powers of management shall constitute good cause under this Article.

Art. 241. – Rights and duties of managers.

(1) The provisions relating to agency shall apply to the rights and duties of managers.

(2) Managers shall be jointly and severally liable to the partners for failure to carry out their duties according to law or under the partnership agreement.

(3) Where liability has been incurred and such liability is not due to the fault of a manager, the manager shall have a right of action against the person through whose fault the liability was occasioned.

Art. 242. – Unauthorized agency.

Where a person holds himself out to be a manager of a partnership or where a manager exceeds his powers, the rules relating to unauthorized agency shall apply.

Chapter  4.  Rights and Duties of Partners

Art. 243. – Duties of the partners.

(1) Every partner shall, in conducting partnership business, use the diligence and skill which he used in conducting his private affairs.

(2) Every partner shall be liable to the other partners in respect of any damage which he has caused by his default.  Any benefit which he has procured for the partnership in handling other business may not be set off against such damage.

Art. 244. – Duty to obtain.

No partner may handle, either for his own benefit or for a third person, any business which would be contrary or prejudicial to the partnership.

Art. 245. – Use of partnership property.

(1) Property, debts and rights brought into or acquired by the partnership shall belong to the partners in common under the terms of the partnership agreement.

(2) Every partner may use partnership property in accordance with usual partnership practice.

(3) No partner may use partnership property against the interests of the partnership or so as to prevent his co-partners from using such property in accordance with their rights.

Art. 246. – Necessary expenses.

Every partner may require his partners to share such expenses as may be necessary to preserve the partnership property.

Art. 247. – Advance or Loans.

(1) A partner who makes and advance of funds to the partnership shall be entitled to interest.

(2) A partner who borrows funds from the partnership shall pay interest.

(3) He may, where appropriate, be liable to pay damages in addition to interest.

Art. 248. – Right to check books and papers.

Every partner shall, notwithstanding any provision to the contrary in the partnership agreement, have the right to check the state of the firm’s business, to consult the books and papers of the partnership and to draw up a statement of the financial position.

Art. 249. – Reports.

(1) Where a partnership continues for more than one year, the partners may require a report on the management to be prepared at the end of each year.

(2) Any provision in a partnership agreement for reports to be submitted at intervals exceeding twelve months shall be of no effect.

Art. 250. – Association with third parties.

(1) No partner may introduce a third party as a partner without the consent of the other partners.

(2) Where a partner gives an interest in his partnership share to a third party or assigns his share to him, the third party does not become a partner and has no right under Art. 248.

Art. 251. – Profit sharing.

(1) The partners shall share all profits which, by their nature, are partnership profits.

(2) Unless otherwise agreed, every partner may require that the profits be distributed immediately after approval of the management report.

Art. 252. – Manner of distributing profits and losses.

(1) Unless otherwise agreed, every partner shall have an equal share in the profits and losses, irrespective of his contribution.

(2) If the agreement specifies either the share in the profits or the share in the losses, this provision shall apply equally to the share of profits and losses.

Art. 253. – Distribution by a third party

(1) Where the partners agree to refer the distribution of profits to one of them or to a third party, such distribution may only be challenged as being inequitable.

(2) No claim shall be entertained where the partner who considers himself to be aggrieved by the distribution has not challenged such distribution within three months of his becoming aware thereof, or where such partner has initiated the execution of the distribution.

Art. 254. – Contribution of skill.

Notwithstanding the provisions of Art. 215, provisions may be made to the effect that a partner who contributes skill only shall share in the profits and not in the losses.

Chapter 5.  Relations of the partnership with third parties.

Art. 255. – Creditors of the partnership.

(1) The creditors of the partnership may claim against partnership assets.

(2) They may also claim against the personal property of the partners who shall, unless otherwise agreed, be jointly and severally liable to them for the obligations of the partnership.  A partner who is sued on his personal property may require, as though he were a guarantor, that the creditor first detrain the property of the partnership.

(3) Any provision relieving the partners or some of them of joint and several liability may not be set up against third parties unless it is shown that such parties were aware of such provision.  Notwithstanding any provision to the contrary, the partners who acted in the name of the partnership shall always be jointly and severally liable.

Art. 256. – Personal creditors.

(1) Personal creditors of the partners may attach the share in the profits due to their debtor.

(2) They may take all steps necessary to protect the share due to their debtor upon the winding-up of the partnership.

(3) If the personal property of their debtor is not sufficient to indemnify them, they may require that, within three months from the date of their demand, the debtor’s share in the partnership be disposed of.

Art. 257.  Set-off.

A person who is a debtor of the partnership may not set off a debt against one of the partners.

Chapter 6.  Dissolution and winding-up of partnership

Art. 258. – Partnership for an undefined period.

(1) Where a partnership is entered into for an undefined period or for the life of one of the partners, or where the power to dissolve on notice is provided in the agreement, every partner may bring about its dissolution by giving six months notice.

(2) Notice to dissolve shall be given in good faith and not be unseasonable.

(3) Notice to dissolve shall be deemed to be unseasonable where the situation is not determined and the dissolution of the partnership should be postponed.

Art. 259. – Withdrawal of a partner.

Where a partner has given notice to dissolve under Art. 258, his partners may prevent dissolution be paying out his share, and the partnership shall continue as between the other partners.

Art. 260. – death, incapacity or bankruptcy.

(1) A partnership shall be dissolved where one of the partners dies or is no longer able, under the law, to be a partner.

(2) A partnership shall be dissolved where a partner is declared bankrupt or where one of his personal creditors causes his share to be disposed of under Art. 256 (3).

(3) The partnership may by agreement continue as between the remaining partners, or with the heirs or representatives of the deceased, incapable or bankrupt partner.

Art. 261. – Expulsion of a partner.

The court may order the expulsion of a partner for good cause and the partnership shall continue as between the remaining partners.

Art.262. – Paying out partner leaving.

(1) Where a partner leaves a partnership and the partnership continues as between the other partners, the rights of the partner who has left shall be settled in cash, on the basis of the value of his rights on the day when he leaves the partnership.

(2) A partner who leaves the partnership shall share in the profits and losses arising from dealings completed or outstanding on the day when he leaves.

(3) He shall be liable to third parties for all dealings made prior to his leaving.

Art. 263. – Powers of managers after dissolution.

(1) The managers shall retain on dissolution their powers until they have made arrangements for the dissolution.

(2) During dissolution, they may only exercise such powers as are necessary to complete the dissolution.

Art. 264. – Appointment of liquidators.

(1) After dissolution, the winding-up shall be carried out by one or more liquidators, appointed under the partnership agreement or by all the partners.

(2) Failing the agreement of the partners, the court shall appoint liquidators.

Art. 265. – Duties and responsibilities of liquidators.

(1) Unless otherwise provided in the partnership agreement or by law, the liquidators shall have the same duties and responsibilities as managers.

(2) The appointment of liquidators may be revoked by the decision of all the partners, or by the court at the request of one partner.

Art. 266. – Inventory.

(1) The managers shall hand over to the liquidators the property of, and documents relating to, the partnership and render and account of their management up to the date of handing over.

(2) The liquidators shall draw up an inventory of the assets and liabilities of the partnership.

 Art. 267. – Powers of the liquidators.

(1) The liquidators shall take all steps necessary to complete the winding-up of the partnership.

(2)     The liquidators may sell the property of the partnership, represent the partnership in legal  and may compromise or refer to arbitration any matters in issue.

(3) The liquidators may not undertake new business in the name of partnership but may complete business already started.

Art. 268. – Settlement with creditors.

(1) The liquidators shall pay the creditors of the partnership, where necessary calling upon the partners for contributions.

(2) They shall settle with the partners debts which they hold against the partnership and restore to partners property whose use only was contributed to the partnership.

Art. 269. – Restitution of contributions.

(1) A partner who has contributed property may not claim it back in kind.

(2) He shall have a claim to the value of his contribution as accepted in the partnership’s accounts.

(3) If the value has not been so fixed, restitution shall be made on the basis of the actual value at the time the contribution was made.

Art. 270. – Distribution of profits and losses.

(1) Where there is a surplus after all claims have been met and contributions returned, the surplus shall be distributed among the partners.

(2) Where the assets are insufficient to repay contributions after payment of debts, expenses and advances, the loss shall be distributed among the partners.

(3) The distribution of profits and losses is to be made among the partners in equal shares, where no other proportion has been specified in the partnership agreement.

Title III.  Joint Venture

Art. 271. Definition.

A joint venture is an agreement between partners on terms mutually agreed and is subject to the general principles of law relating to partnerships.

Art. 272. – Absence of divulgation

(1) A joint venture is not made known to third parties.

(2) A joint venture agreement need not be in writing and is not subject to registration and other forms of publication required in respect of other business organizations.

(3) A joint venture does not have legal personality.

(4) Where a joint venture is made known to third parties, it shall be deemed, insofar as such parties are concerned, to be an actual partnership.

Art. 273. – Contributions.

Unless otherwise provided, every partner owns his contribution.

Art. 274. – Shares.

(1) A joint venture may not issue negotiable securities.

(2) Unless otherwise provided, shares may be assigned only with the agreement of all the partners.

Art. 275. – Management.

(1) A joint venture shall be managed by one or more managers, who need not be partners.

(2) Where no manager is appointed, all the partners shall have the status of managers.

(3) The appointment of a partner as manager may not be revoked without good cause.

(4) The powers of the manager shall be specified in the memorandum of association.  The provisions relating to these powers may not be set up against third parties.

Art. 276. – Partners who are not managers.

(1) The manager is known to third parties.  He shall be fully responsible for the liabilities of the joint venture.

(2) Partners who are not managers shall meet liabilities only to the extent fixed in the memorandum of association.

(3) The partners may supervise the work of the manager.

(4) In a commercial joint venture, partners who are not managers and who take part in the management shall be jointly and severally liable as between themselves and with the manager.

(5) Every partner shall deal with third parties in his own name.

Art. 277. – Duty to account.

A manager shall account to the partners.  Any provision relieving him from this duty shall be of no effect.

Art. 278. – Grounds for dissolution.

(1) A joint venture may be dissolved on one of the following grounds:

(a) the expiry of the term fixed by the memorandum of association, unless there is provision for its extension;

(b) the completion of the venture;

(c) failure of the purpose or impossibility of performance;

(d) a decision of all the partners for dissolution taken at any time;

(e) a request for dissolution by one partner, where no fixed term has been specified;

(f) dissolution by the court for good cause at the request of one partner;

(g) the acquisition by one partner of all the shares;

(h) death, bankruptcy or incapacity of partner, unless otherwise lawfully agreed;

(i) a decision of the manager, if such power is conferred upon him in the memorandum of association.

(2) The provisions of this Article shall apply notwithstanding any provision to the contrary in the memorandum of association.

Art. 279.  Expulsion of a partner.

(1) Where dissolution is requested for reasons attributable to one partner, the court may, on the application of the other partners, order the expulsion of the partner at fault in lieu of dissolution.

(2) The memorandum of association may provide for expulsion.

(3) A partner who is expelled shall be paid what is due to him on the day of expulsion.

Title IV.  General partnership.

Art. 280. – Nature of general partnership.

(1) A general partnership consists of partners who are personally, jointly, severally and fully liable as between themselves and to the partnership for the partnership firm’s undertakings.  Any provision to the contrary in the partnership agreement shall be of no effect with regard to third parties.

(2) Where the partnership is a commercial partnership, each partner shall have the status of a trader.

(3) The partnership shall have a firm-name.

(4) The provisions of Art. 282 shall apply where partnership shares are assigned or transferred.

Art. 281. – Firm-name.

(1) The firm-name shall consist of the names of at least two of the partners followed by the words “General partnership”, and may not contain names of persons who are not partners.

(2) Where a partner who is mentioned in the firm-name ceases to be a partner, the firm-name shall be changed accordingly.

(3) Where a person not being a partner permits his name to be used in the firm-name, he shall be liable as a full partner.

Art. 282. – Rules concerning shares.

(1) A share may be assigned or transferred where all the partners agree.

(2) The memorandum of association may provide that approval shall be given by a majority of the partners.

(3) Unless the firm’s creditors agree, a partner who has assigned his share shall be liable for the firm’s debts up to the date of assignment.

Art. 283.  Granting of beneficial interest in share to third party.

(1) A partner may without approval grant to a third party the beneficial rights and interests in his share.

(2) Such grant shall not bind the partnership.

(3) The third party has none of the rights of a partner.

Art. 284. – Memorandum of association.

The memorandum of association shall be drawn up by the partners.  It shall contain:

(1) the name, address and nationality of each partner;

(2) the firm-name;

(3) the head office and branches, if any;

(4) the business purposes of the firm;

(5) the contributions of each partner, their value and the method of valuation;

(6) the services required from persons contributing skill;

(7) the share of each partner in the profits and in the losses and the agreed procedure for allocation;

(8) the managers and agents of the firm;

(9) the period of time for which the partnership has been established.

Art. 285. – Publication of notice and registration.

(1) A notice published under Art. 219 (2) (a) and 220 shall contain the particulars specified in Art. 284 (1) - (6), (8) and (9).

(2) The same particulars shall appear on the application for registration in the commercial register.  The application shall be signed by the manager or a person acting on his behalf.

Art. 286. – Undertakings of partnership.

The partnership may acquire rights and liabilities and sue or be sued under its firm-name.

Art. 287. – Administration of partnership.

(1) The partnership shall be administered by one or more managers who may or may not be partners.

(2) Where no manager is appointed, each partner shall be a manager.

Art. 288. – More than one manager.

(1) Where all the partners are managers, or where several persons have been appointed managers and their duties have not been specified, or it has not been specified that they act jointly, they may each carry out acts of management.

(2) Where the memorandum provides for the separation of duties of the managers, such separation shall only affect third parties where it has been entered in the commercial register or if it is shown that the third parties were aware of such separation.

(3) Each manager may object to dealings contemplated by other managers.  Such objection shall be decided on by a majority vote of all the partners.

Art. 289. – Scope of duties of mangers.

(1) Managers may, in accordance with the law, act for and bind their firm.

(2) Any provisions restricting the extent of these powers shall only affect third parties where such provisions have been entered in the commercial register or if it is shown that the third parties were aware of such provisions.

Art. 290. – Manager’s exercise of powers.

(1) Where a manager acts in the firm-name for this own profit, the partnership shall be liable to third parties in good faith.  Where it is shown by the firm that the third party was aware of the improper use of the firm-name by the manager, the manager alone shall be liable.

(2) Where a manager deals with a third party without using the firm-name, he shall be deemed to have acted on his own behalf.  The firm shall be liable where the third party can show that the manager was transacting business for the firm.

(3) A manager who acts outside the scope of his employment shall alone be liable.

Art. 291. – Dealings with the partnership.

Except with the special approval of the partners, a manager may not have dealings with the firm on his own behalf.

Art. 292. – restrictions on private trade.

(1) Unless otherwise agreed, no partner may carry out transactions on behalf of a third party or on his own behalf which relate to business carried on by his firm, nor may he be a partner with joint and several liability in the management of a firm carrying on similar business.

(2) An unlimited agreement under sub-article (1) shall be valid for one year only.

Art. 293. – Dismissal of manager.

(1) A manager appointed in the memorandum of association or following an amendment of the memorandum may only be dismissed by the court for good cause.

(2) A manager not appointed as provided in sub-art. (1) may be freely dismissed by the partners.

Art. 294. – Liability of partners.

No action may be taken against individual partners for debts due by the partnership until after payment has been demanded from the partnership: provided that an action for the repayment of fictitious dividends may be brought directly against individual partners.

Art. 295. – Other provisions applicable.

The provisions of Art. 227-232, 233 (1), 235, 248,249,258,260,267-270 of this Code shall apply to general partnerships.

Title V.  Limited Partnership

Art. 296. – Nature of limited partnership.

A limited partnership comprises tow types of partners: general partners in full liable personally, jointly and severally and limited partners who are only liable to the extent of their contributions.