Research Assignment Paper on Commercial Laws in Oman (Essay Sample)

Commercial Laws in Oman
Author's name
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The Gulf regional legal environment of business
Introduction
Every country in the world has commercial rules that provide a defined code of conduct that provides a fair ground for doing business. In Oman, the commercial law allows for efficient regulation of all the commercial activities which include commercial responsibilities and contracts, bankruptcy, and commercial instruments (Furr and Furr, 2013, 38). Commercial laws provide rules that investors should strictly adhere to the formation, management, and liquidation of a business company in a country. Moreover, they also provide a reliable guideline on how to solve conflicts in business companies hence help to provide an enabling business environment. In addition, commercial laws of the country are meant to make it easy to start and run business hence attracting investors in order to promote economic growth. Commercial disputes are settled in the commercial court in Oman (Tekin, 2015, 17).
Some of the companies covered by commercial laws include limited partnerships, general partnerships, joint ventures and limited liability companies among others. These companies are formed through business deals entered by various investors. Therefore, these laws help negotiate business deals entered into by the investors during the company formation. This paper discusses the characteristics, formation, management, liquidation and their conflict resolution in relation to the commercial laws of Oman. Commercial law is regulated by the uniform commercial code which is a set of laws that regulates the sale of gods, negotiable instruments, leases of goods and ensure secure business transactions. Countries have adopted these commercial laws although other countries have modified them and all countries are free to make relevant changes to the laws (Furr and Furr 2013, 38). There are different types of business companies depending on their formation and operation. The joint ventures refer to investment involving two or more individuals with the hope of sharing profit in the end. It is an agreement between parties that is usually for a specific period of time. Partnership is a single business owned by two or more people. There are different types of partnerships which include general partnerships, limited partnerships, and joint ventures. General partnerships allow for equal division of liability, profits, and duties of management among the partners. Here, the partners have unlimited liability. Limited partnerships unlike general partnerships allow for the limited liability of the partners. The liability depends on the ratio of the investment made by each partner.
There are several types of business companies recognized by the commercial laws of any given country (Johnson et al., 2014, 15). Some of these companies include joint ventures, general partnerships, limited partnerships, and unlimited personal liability companies among others. This essay will discuss limited liability companies and the general partnerships. General partnerships are formed when two or more people come into contract with the main aim of affecting commercial transactions by forming a company under the joint trade name (Oman, 2014, 33). In Oman, the partnership between companies requires two directors and two shareholders to have offices in Oman. According to Johnson et al., (2014, 15), all partners in the general partnership have unlimited liability as joint debtors to the company. Nevertheless, the partners in the general partnerships participate in the business operations of the company directly. The partners are also entitled to internal material rights which include a share of profit at the end of the year, liquidation quota when there the termination of the partnership, compensation in case of damage during the business mission. On the other hand, partners in the general partnership have nonmaterial rights which include the right to participate in the management of the company, right to vote and right to examine any partner who does not take part in the management of the company.
The partners have obligations to make the financial contribution as required by the article of association, to pay interest, to be loyal and to actively participate in the day to day running of the partnership (Meese and Oman, 2014, 273). Limited Liability Company can be formed by one person or a group of persons in accordance with the commercial laws. The company must have the article of association signed by all the shareholders for it to be formed. The article of association contains the company’s name, the purpose of the company, amount of share capital and nominal share value of each shareholder. Furthermore, the name of the limited liability company designations Limited Liability Company or abbreviations LLC. The shareholders are not liable for any actions of business hence enjoy limited liability. All the members have equal voting rights regardless of the number of shares he or she owns.
The main objective of this course paper is to evaluate the commercial laws of Oman in relation to the general partnerships and limited liability companies. This helps understand the two types of companies and the commercial law requirement for them to operate legally in the Oman. This paper aims at analyzing the impact of commercial laws of Oman on the limited liability companies as well as the general partnerships in that country. These companies are formed out of contractual agreements between individuals or different companies. Therefore, conflicts are bound to occur and if they do, they risk the life the company. This paper will highlight some of the steps aimed at avoiding, mediating, and solve conflicts in general partnerships and the limited liability companies.
Discussion
General partnerships and limited liability companies have distinct characteristics. One of the major characteristics of general partnerships is the unlimited liability of the partners) (Tekin, 2015, 17). This also includes the debts arising from the actions of other partners on behalf the partnership. All the partners can enter into agreements and do business on behalf of the partnership. This does not depend on whether the other partners were not involved in the authorization of the agreement this characteristic of unlimited liability helps distinguish general partnerships from other companies whose owners or shareholders tend to have limited liability hence enjoy some form of protection from the actions of the business. However, in the general partnerships, any action of the business may have effect lead to personal liability on all the partners.
Another feature of a partnership is that it must be formed by two or more people. There cannot be a general partnership that only has an individual. Furthermore, the general partnership can be formed between two or more corporations and also with other partnerships. The other feature of general partnerships is that all partners play a role in the management of the partnership. The=is can be in form of labor, funds, property or even ideas (Johnson et al., 2014, 14). Each partner co-owns the company and has a right to be involved in the management of the business together with other partners who also enjoy similar rights. However, this can be changed in the agreement of the partners. Partners are also entitled to a share of the profits and contribute money in order to offset debts. It is also clear that general partnerships have a limited lifespan. Usually, the lifespan of the partnership is established by the agreement as a specific number of years. Nevertheless, in the case of no agreement on the company’s lifespan, the automatic termination of the partnership can be caused by death, bankruptcy, inability to perform a specific task or if the partner dies. In the event of admission or withdrawal of a partner, there is the need for as a new agreement if the business has to continue operating as a general partnership. General partnerships are also easy to form as it has few requirements other than the registration of business. General partnerships are also easy to dissolve and the decision is almost instant. The decision to transfer ownership of the general partnership to a new or an existing partner requires the approval of all the partners. Limited liability companies have features that are identical to them all despite different countries having unique commercial laws. One feature that is associated with all the limited liability companies is there being a separate legal entity (Furr and Furr, J.L., 2013, 38). The companies buy and sell properties, recruit employees, retain lawyers, defend any legal claim against them and institute lawsuits. The companies also continue to operate even after the withdrawal of the member. Limited liability companies also have limited liability and the members are protected against the actions of the company. Therefore, personal assets of the company members are not put at risk by the action of the managers or one individual as the involved persons shoulder the responsibility. Limited liability companies also have perpetual succession which ensures an extended life span. The companies only cease to exist when the objective have been accomplished or specifically wound. Death or withdrawal of the member has no effect on the company. Shares of the companies can also be freely transferred subject to the company’s rules and procedures. Finally, the limited liability companies are usually run by the board of directors, not the shareholders. Most of the managerial personnel are hired by the company to help manage it.
Formation, management, and liquidation of limited liability companies and general partnerships