Solidarity companies are a type of company run by individuals in which the personal consideration of the partner is considered without financial consideration, and it is one of the most important Companies that people work for. Through this type of company, it is possible to invest in various fields as long as the investor accepts this type of company, so that the whole picture is in front of our investor friend and our followers on the Profit World website. Today's topic focuses on everything related to partnership companies.

What are Partnerships?

The joint liability company is a business entity consisting of two or more persons who have signed an agreement to share responsibility and are jointly liable for any debts the company may have. All partners are responsible for the company's debts, regardless of who pays them. This type of company is governed by law, so any agreements entered into between members are binding.

The ownership of shares in the company is limited to the agreement of all partners. If any partner violates the terms of his contract, he will be harmed and his share of the profits and losses will be calculated at the end of the company’s financial year according to the budget and profit account.

Partnership properties:

1. Type: corporations are people-centered companies in which Give personal consideration to the company.
2. Partners' liability: The joint liability company bears unlimited joint liability to all its partners for all the company's debts. This means that any creditor has the right to pursue any partner in the company to claim his debts, regardless of how much that partner owns in the company. First of all, the creditors have the right to go after the partner who owes them money, before turning to the company to pay off its own debts. Partners in a partnership are not exempt from Solidarity, which means they are responsible for paying every penny owed by the company even if it exceeds their share in it.
3. Capital: The minimum capital requirements for companies vary according to their type, but in general companies and individuals need at least thousands of dirhams. However, for services that are carried out entirely within industrial areas and urban cities, the minimum capital requirements are set by the UAE government.
4. Transfer of Ownership: When it comes to dealing with third parties, each partner in the public company is not entitled to unilaterally assign his share to a third party without the consent of the other partners. Each partner remains liable for its share even when dealing with third parties jointly.
5. Trading shares: In business partnerships, negotiable instruments may not be issued for the shares of the partners.
6. Name of the company: Every joint liability company has an address, which is the name by which it is distinguished from others, and it deals with others with this name as a separate legal entity. This legal person has its own financial responsibility, and the name of the company must include at least some of the names of the partners. It is not necessary that the name of the company include all the names of the partners, but it is necessary that at least some of the names of the partners be included in the name of the company. Corporate actions must be performed using the company's own name.
7. Acquiring the status of a merchant: When a partnership company grants a partner the status of a merchant, even if he did not have this capacity before, the partner is considered part of this legal person (the company) and is personally and jointly liable for all the debts of the company.

Steps for establishing partnerships:

The partner is supposed to help the company achieve its goals in a positive way. In order to establish a general partnership company, certain documents and procedures must be available through which the company can start its operations. To create a company, you will need to sign a contract. The contract must be in writing to be effective, and all revisions must also be documented. The following conditions must be met for any contract to be considered valid: the consent of the parties, the place of execution, the terms and conditions of the transaction, and the reason for the conclusion of the agreement.

What are the conditions for establishing partnership companies?

Conditions including the number of partners, the provision of shares, their participation in profits and losses, and the purpose of the company must be met. The contract contains detailed clauses related to partnership operations. These provisions include details of the partners' names, titles, capacities, place of residence, company address, trade name, head office, names of partners authorized to manage the company, company start date, termination time, and company liquidation provisions. The contract stipulates that the final accounts and budget must be prepared at least once a year and that these documents are subject to external audit. In addition, provisions are made to assess the value of the company upon separation or death of a partner, to calculate the share owned by the deceased partner, and to pay the heirs.

The law requires that the general partnership agreement be announced after fulfilling the conditions specified above so that it is not invalidated because the third parties are aware of everything mentioned in the company contract, such as its purpose, type of work and management authority. . There are two types of advertisements that can be done to achieve this:

• Legal Publicity: The best way to protect your company's legal rights is to properly establish it and claim its legal personality against third parties. Legal publicity actions include: Depositing a summary of the company’s contract in the office of the clerk of the court of first instance, in whose jurisdiction the company’s headquarters or branches are located, in order to add it to the register prepared for that. Placing a summary of the company's contract for a period of three months on the court's judicial notice board. Publishing the summary of the contract in one of the newspapers located in the company's center, and preparing for publishing judicial announcements. If you have not completed all the procedures described in the contract or started to incorporation of your company by the date specified, it will become invalid.
• Declaration in the Commercial Registry: It is necessary to renew the registration of your company at the Commercial Registry Office where the main office or branch is located. This must be done every five years, regardless of when the registration was originally submitted. Failure to register in the Commercial Register will not result in any consequences and will not affect your right to bring legal action before others. It is important to note that advertising your company in the Commercial Register does not exempt you from legal publicity.

The UAE is a great place to do business. It ranks 16th in the world in terms of ease of doing business, according to the World Bank 2020 report. The country also ranks highly in several other categories, including delivering electricity (first place), dealing with building permits (third place), and executing contracts . (ninth place), and property registration (tenth place). Overall, it is an excellent environment for entrepreneurs and investors.