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Partnership Limited by Shares According to The Egyptian Law

شركة التوصية بالأسهم - partnership limited by shares

Partnerships limited by shares are companies that have at least one partner is joint alongside two or more shareholders partners whether they are natural person with legal capacity or a legal entity. The joint partner alone is responsible for the company’s debts in his personal funds, while the shareholders partners are only liable up to the extent of their shares in the company’s capital.

According to this, it can be said that Partnerships limited by shares are a hybrid type, combining aspects of both partnership and corporate structures, as they consider both financial and personal considerations.

A Partnerships limited by shares consists of two categories of partners (Joint Partners and Shareholders Partners):

Joint Partner(s) have the same legal status as a joint partner in Partnerships limited by shares, they bear personal and joint liability for the company’s debts with their personal funds. Each of gain the capacity of a merchant, and the company’s insolvency coincides with their insolvency.

On the other hand, the shareholder partner(s) have the legal status of shareholders in a joint-stock company, they are only liable within the limits of the value of their shares. In general, this company is treated as if it were a general partnership concerning the joint partner, and as a joint-stock company concerning the shareholders partner(s).

The Capital of the partnership limited by shares

The capital of the partnership limited by shares is divided into quotas and stock:

Firstly: The share of the joint partner should take one of two forms, either in cash or in-kind. It is not permissible to waive the share or any part of it except with the approval of the Extra-Ordinary General Assembly.

Secondly: The capital of the company shouldn’t be less than 250,000 EGP (Two Hundred and Fifty Egyptian Pounds), and 10% of the total capital must be deposited at the time of the incorporation.

Thirdly: If the joint partner provides an in-kind share, it must be evaluated according to the provisions of joint-stock companies.

Shareholders and Supervisory Board

  • The minimum number of founders is two, whether they are natural persons or legal entities, provided that natural persons have the legal capacity.
  • At least one of the partners must be a joint partner, and the company must adopt the name of the joint partner as its tradename, and the management shall be entrusted to him.
  • The minimum number of the members of the Supervisory Board is “three”, It is permissible for some or all members of the Supervisory Board to be non-managing partners or others.

Termination of the Partnership limited by shares

  1. Withdrawal of one of the joint partners, their death, their incapacitation, or their bankruptcy, unless the company’s statute states otherwise.
  2. Occurrence of the specific reasons that lead to the termination of Joint-Stock Companies (such as the expiration of the company’s term, the depletion of most of its capital, the completion of the purpose for which it was established, or its merger with another company).

Differences between Limited Partnership and Partnership Limited by Shares

While each of these companies shares some common characteristics, they also have distinct features that set them apart. The following points highlight the difference between them:

Partnership limited by shares

  1. Capital Division: Its capital is divided into small parts known as shares.
  2. Each individual within the company participates with share(s), representing his stake in the company.
  3. Individuals participating are referred to as shareholders.
  4. Profits are distributed among individuals based on the number of shares they own.
  5. Ownership of the shares can be easily transferred among the shareholders without the need to notify the rest of the shareholders.

Limited Partnership

  1. Consists of two primary parties, the first party is the financial contributor only and is not entitled to participate in the management (Financial Partner).
  2. Typically chosen by individuals restricted from engaging in jobs other than their primary job.
  3. The second party is the administrative party, referred to as the manager.
  4. The Financial Partner has the option to waive or sell his share in the company as a in his capacity as a merchant to another person.
  5. The partners are not permitted to waive their shares in the capital without the unanimous consent of all the other partners.