Tunisian Company Law Overview

PART II. COMPANY LAW

• Tunisian company law governs the establishment, operation, and management of companies.
• The Code of Commercial Companies (CCC, 2000) is the primary legal framework for companies.
• The Code is supplemented by the Code of Contract Obligations and the Code of Commerce (1959).
• The CCC defines company formation, structure, rights, obligations, and stakeholder relationships, providing essential knowledge for entrepreneurs, investors, and business owners in Tunisia.

Definition of a Company

• A company is a contract where one or more individuals combine assets or labor to share profits or economic benefits.
• In a unipersonal limited liability partnership, a single individual comprises the company.

Economic Advantages of Companies

• Companies provide traders with better organization and protection against losses in large-scale commercial activities.
• States encourage company creation as key components of economic growth and structure.
• Society provides incentives for company formation to boost economic development and stability.

Partnerships vs. Corporations

• Partnerships (société de personnes) and corporations (société de capitaux) are distinct forms of business organizations.
• Key differences include legal entity, liability, management and decision-making, taxation, transferability and ownability, and continuity and succession.

Legal Entity

• Corporations are separate legal entities from their owners (shareholders).
• Partnerships are not separate legal entities; profits, losses, and responsibilities are shared among partners.

Liability

• In corporations, shareholders have limited liability, meaning personal assets are protected from company debts and liabilities.
• In partnerships, partners have unlimited personal liability; their personal assets can be used to cover partnership debts.

Management and Decision-Making

• In corporations, the board of directors manages company affairs and makes decisions on behalf of shareholders, who have voting rights based on ownership percentage.
• In partnerships, all partners generally have an equal say in management and decision-making, unless otherwise specified in a partnership agreement. Partnerships tend to have a more flexible management structure.

Taxation

• Corporations are taxed at the entity level (corporate income tax).
• Shareholders are also taxed on dividends and other distributions.
• Partnerships are pass-through entities; profits and losses are passed through to the partners and taxed at their individual rates. Partners report their share of the partnership's income and losses on their individual tax returns.

Forms of Partnerships in Tunisia

• General Partnerships (Societe en Nom Collectif (SNC)):

  • Partners are personally liable for all company debts.
  • Partners have a shared ownership and management.
  • There is no minimum capital requirement.

• Limited Partnerships (société en commandite simple):

  • General partners (commandités) manage the business and have unlimited liability.
  • Limited partners (commanditaires) have liability limited to their contributions, and do not manage.
  • General partners' names must appear in the company name.

Example of Business Formation (General Partnership)

• Example of John and Sarah forming a bakery business as a general partnership.
• Includes features like joint and several liability, shared management, equal profit/loss sharing, pass-through taxation, and limited duration.

Example of Business Formation (Limited Partnership)

• Example of James and Nada forming a real estate investment limited partnership.
• Includes features like roles of general and limited partners, their responsibilities, limited partner liability confined to their investment.

Corporations

• A corporation is a separate legal entity, distinct from its owners (shareholders).
• Shareholder liability is limited to their investment.
• Common forms in Tunisia include Société Anonyme (SA), Société à Responsabilité Limitée (SARL), and Société Unipersonnelle à Responsabilité Limitée (SUARL).

Joint Stock Company (in Tunisia)

• A joint-stock company is a corporation with shares.
  • At least 7 members are required for formation.
  • Members have liability confined to the amount of their contribution.

Share Capital Requirements

• Minimum capital is required for corporations, specifically 5,000 dinars for closely held corporations and 50,000 dinars for publicly held corporations, determined by their status as public or private.

Shareholder Rights

• Shareholder contributions determine the number of shares allocated to them.

Liability for Corporations

• Shareholder liability is limited to their contributions; corporate debts are not recoverable from personal assets.

Publicly Held Corporations

• Issue and transfer securities.
• Seek public funding through public offerings.
• Declared as publicly held in their articles of association per a 1994 law.

This quiz covers the essential aspects of Tunisian company law, including the Code of Commercial Companies, and its role in company formation and management. It examines the definition of a company and the economic advantages of forming one in Tunisia suitable for entrepreneurs and investors.