Let’s have some general insights to the Federal Law No. (2) of 2015 on Commercial Companies with regards to the company formation.
What is a company?
According to the Law a company is a contract whereby two persons or more are obliged to contribute to an economic project aimed to make profit, through providing a share of money or work, and dividing whatever profit or loss achieved or sustained by such project. An economic project shall include any commercial, financial, industrial, agricultural or real estate activity or any other economic activity. A company may be incorporated and fully owned by one person as per the provisions of this Law.
A company must be in one of the following forms:
- General partnership.
- Limited partnership.
- Limited liability company.
- Public joint stock company.
- Private joint stock company.
Any company not incorporated under one of the forms above shall be deemed invalid, and persons who contracted in name of such company shall be jointly and severally held liable for any liabilities created by such contract.
Company shall have a commercial name, which may not be in violation of the public order of the state. Name shall be followed with the legal form of the Company, and no company may be registered in a name that has been previously registered or a similar name that may cause confusion.
Company may, by special decision issued by the General Assembly, change its name, provided that the same is approved by the Competent Authority and accepted by the Registrar. Changing company’s name shall not affect rights, obligations or legal procedures taken by or against the Company, and any legal procedures previously taken or initiated by or against the Company shall continue in the amended name of the Company.
Each company shall have a registered address in the State to which notices and correspondence are addressed. All contracts, quittances, correspondence and applications issued by the Company shall bear its name, legal form, registration number and address, and if the Company’s capital is added to such information, the paid-up capital must be stated. If the company is under liquidation, this shall be stated in the papers issued by the Company.
Nature of Share Contributed by a Partner
Company’s capital is made of cash shares and/or in-kind shares of estimated value. In case of active partner, partner’s share may not be work. Partner’s share may not his reputation and influence.
Legal Entity of Company
As from the date of being registered in the Commercial Register with the Competent Authority, the Company gains a legal entity as per the provisions of this Law and decisions issued thereunder. During incorporation period, the company shall have a legal entity to the extent needed for its incorporation, and Company shall be liable for actions of founders thereof in relation to any procedures and incorporation requirements during such period, provided that it has been completely incorporated according to the provisions hereof.
Upon dissolution the Company shall be deemed as in liquidation phases, and shall have the legal entity during liquidation period to the extent needed for liquidation works. The phrase “under liquidation” shall be added to Company’s name in clear font.
Subsidiaries of a holding company shall enjoy an independent personality and shall be financially independent
Each company shall maintain accounting records showing its transactions, provided that such records would accurately and at any time demonstrate the Company’s financial standing, and through which partners and shareholders could verify that Company’s accounts are maintained as per the provisions of this Law.
Each company shall maintain its accounting records at its head office for at least five (5) years as from the company’s fiscal year end date. Company may maintain an electronic copy of originals of any documents and papers kept or deposited therewith as per the controls of which Minister’s decision will be issued.