The contract of company

The legislator in the commercial code did not define the legal situation of the partner and did
not define the company meaning. So we return to civil code where the article 505 defines the
company by saying that'' the company is a contract according with two or more persons are
obliged to associate in a business enterprise, by afford a portion of money or work, to share
profit and loss''

- The condition of contract

1- The objective condition
i. The number of parties:
The legislator provides in article 505 of civil code that the numbers of the parties to a
company contract not less than two.
There is another exception as to the public sector companies. The legislator provides in article
7/5 of the law no 97/1973 of the public sector that'' the board of director of the public
organization is competent to establish unilaterally a corporation. The company is considered
public sector each company owned by public person.
The legislature defines the limited liability company by the maximum number of the parties
''a company the number of partners in it does not exceed fifty partners.

ii. Offer the shares in the capital:

The capital of partnership is the total amount of money paid by the partners.
There are two kinds of sharing, property or the work of the partner
The partnership property is the sum of all of the partnership assets paid by the partners, it
may be money property or use certain property rather than the property itself.
On the other hand, the partner may contribute no physical portion but his skill and services.

iii. The sharing of profits and contribution to the loss:

According to the law the partnership is a financial project organized to realize profit. It is an
association to carry on a business for profit, and in the same time must contribute toward the
losses.
The legislator provides that if the partners agree to exempt a partner from contribution to
losses the contract will be null
 iv. The intention of sharing:
The company defined as the association of two or more persons for the purpose of carrying on
a business as co-owners for profit.
It means that a common intention between the partners of the company to be this kind of
association. So, if one partner does not intent to share profit, and he believes that he gives the
money as a loan. then there is no a company

2- The form conditions

1- The writing
The legislator provides in article 507 of the civil code that'' the company contract must be
written otherwise it will be null, also it will be null all modification on the contract without the
form of that contract'' then the legislature looks to the writing of the contract as a necessary
element of the validy of the contract and also any modification to the contract must be in
writing.

2- The publicity
Any company must be published through the commercial registration department without this
process the company cannot exercise the activity in the market. as to the corporation and
limited liability company the registration is more over a condition to acquire the moral
personality.

The effects of the contract of company

There are two kinds of effects of the company contract, one belongs to the company, the
second belongs to the partners.

1- Effects as to the company

There are effects raised as a result of making the contract, these effects as follow

i. The legal personality

After concluding the contract, a new legal person exists separated from the partners of the
company who are the parties to the contract.
As a general rule the legal personality of the company starts mere concluding the contract. But
in case of corporation and limited liability companies the company acquires the legal
personality or entity after fifteen days of registered the company in commercial registration
department.
 ii. Independent partimonium
The company has separated patrimonium , from the partners. It can act and the gain or loss
return directly to the company not to the partners. when the company makes profits they
enter directly to the partimonium of the company. also when it makes losses it bears them in
its partimonium directly.

iii. Firm name

The company should have a firm name. the partners provide the business enterprise with a
name. the name selected by the partners should not be identical with or similar to the name
of any other existing business concern.

iv. The nationality

The company as it has the nationality of legal entity must have a domicile. It domicile is the
place of its business.

v. The domicile
The company has the place of establishing. so the company established in Egypt it has the
Egyptian nationality.

2- Contract liability of partners

The partners are jointly liable on all debts and contract obligations of the company.

3- Rights to information and inspection of the books

Each partner is entitled to full information as all company matters upon demand at any time.