PART II.

COMPANY LAW
Company law in Tunisia provides the legal framework for establishing,
operating, and managing different types of companies in the country. It sets out
the rules and regulations that govern the formation, structure, rights, and
obligations of companies, as well as the relationships between company
shareholders, directors, and other stakeholders. Understanding company law is
crucial for entrepreneurs, investors, and business owners who wish to establish
and operate companies in Tunisia. In this lesson, we will explore the key
concepts and principles of company law in Tunisia.

Although the Code of Commercial Companies, enacted in Nov 3 rd -2000 is

considered as the main legal framework for companies in Tunisia, other
sources are used to regulate commercial companies such as the code of
contract obligations and the code of commerce (1959)
Definition of company

Article 2 of CCC «a company is a contract by

which one or more persons put in common their
assets or labor force or both in order to share
profits, or to beneficiate from the resulting
economy. However, in Unipersonal limited
liability partnership the company is composed of
a unique associate».
There are many reasons behind the choice of a
company:
1. Economic and social Reasons
are provided by the society. In fact, a trader has
additional economic advantages when the commercial
activity is organized under the form of a company.
When commercial activity is wide it may beneficiate
with the advantages of commercial companies form
that may even grant a certain protection against loss.
Economic reason don’t concern only the trader, but
also the State that has to encourage companies
creation in order to push the national economy. The
latter in fact relies on the companies as the principal
cell of the economic structure in a given State.
2. Legal reasons The trader may be encouraged
to investment under the form
make
commercial of companybecause the
environment encourages him. legal In
company law was born in 1906 with the Tunisia
Code of
obligations and contracts, (arts 1249 and
follow). In 1959, the commercial code tried to
organize commercial company law under two
types of rules: - common rules to different kinds
of companies -Special rules applicable to every
kind of (companies of
companies persons/
shares/companies of LLC)
 Partnerships vs Corporations

Partnerships (société de personnes) and corporations (société

de capitaux) are two different forms of business organizations,
each with its own characteristics and legal implications.
Their main differences are :
-Legal entity
-Liability
-Management and decision
-Taxation
-Transferability and ownability
-Continuity and succession
 Legal Entity: A corporation is a legal entity that is separate and
distinct from its owners, known as shareholders. A partnership,
on the other hand, is not a separate legal entity; it is a business
structure where two or more individuals (partners) share the
profits, losses, and responsibilities of the business.
• Liability:In a corporation, shareholders generally have
limited liability, which means their personal assets are
protected from the company's debts and liabilities. The
liability of shareholders is limited to their investment in
the corporation. In a partnership, partners have
unlimited personal liability, which means their personal
assets can be used to satisfy the debts and liabilities of
the partnership. This means that in a partnership, each
partner is personally liable for the partnership's debts
and liabilities, including those incurred by other
partners.
• Management and Decision-Making: In a corporation, the
board of directors is responsible for managing the
company's affairs and making decisions on behalf of the
shareholders. Shareholders typically have voting rights
based on their ownership percentage and elect the
board of directors. In a partnership, all partners
generally have an equal say in the management and
decision-making of the business, unless otherwise
agreed upon in a partnership agreement. Partnerships
tend to have a more flexible and informal management
structure compared to corporations.
• Taxation: Corporations are subject to corporate
income tax at the entity level, and shareholders are
also subject to individual income tax on dividends
or other distributions they receive from the
corporation. Partnerships, on the other hand, are
pass-through entities, where profits and losses are
passed through to the partners and taxed at their
individual tax rates. Partners are responsible for
reporting their share of the partnership's income
and losses on their individual tax returns.
 Forms of Partnerships in Tunisia

• The two most commonly used forms in Tunisia

are:
– General Partnerships “Societe en Nom Collectif
(SNC)”
– Limited Partnership « société en commandite
simple
 General Partnerships
• Partners: Partners have the personal quality of traders
(commercial capacity) or capacity to trade.
• Company Object : is a commercial company by its object
• Company Name ( no free choice / must be composed of
all partners or one of them name + “et companie”
• Company share capital: no minimum capital is required
• Liability : partners are jointly and severally liable for any
legal actions and debts the company may face
 Example
John and Sarah are two friends who share a passion for baking. They decide
to start a bakery business together and form a general partnership called
« John Bakery". They agree to equally share the responsibilities, profits, and
losses of the business.
As a general partnership, John and Sarah have a few key characteristics:
• Joint and Several Liability: Both John and Sarah are personally liable for
the debts, obligations, and legal liabilities of the partnership. This means
that if the partnership cannot pay its debts, creditors can go after John and
Sarah's personal assets to satisfy those debts.

• Shared Management and Decision-Making: John and Sarah both have

equal authority to manage the day-to-day operations of the bakery and
make decisions on behalf of the partnership. They may have different roles
and responsibilities based on their skills and expertise, but they both have a
say in the business decisions.
• Equal Sharing of Profits and Losses: John and Sarah have agreed to share
the profits and losses of the bakery equally, as per their partnership
agreement. This means that any profits generated by the business are
shared equally between them, and any losses incurred are also borne
equally.

• Pass-through Taxation: The partnership itself does not pay taxes.

Instead, the profits and losses of the partnership flow through to John
and Sarah's individual tax returns, and they are personally responsible
for reporting their share of the partnership's income or losses on their
individual tax returns.
• Limited Duration: A general partnership is not a perpetual entity and
may dissolve if one of the partners decides to leave or if there is a
specific term mentioned in the partnership agreement.
 Limited partnerships
• Partners : The Company is composed of Limited partners ( Associes
commanditaires)& General partners (Associes commandites )
• General partners: they have the quality of traders
• Limited partners: they don’t have the quality of traders
• Company Object : limited partner entrusts the management of his funds to
another partner, the general partner which has increased prerogatives
because of the greater risks involved.
• Company Name : the name must be of the General partner
• Company Share Capital : General partners can make the 3 types of
contributions ( cash, in kind and in industry), limited partners can make only
contributions on cash and in kind. No minimum share capital amount required.
• Liability : General partners are personally liable for all debts that the company
may face. And limited partners are liable only for the amount of their
contributions
 Example
• James and Nada want to invest in real estate and decide to form a limited
partnership called « James Real Estates". James is an experienced real estate
investor and will be the general partner responsible for managing the day-to-day
operations of the business. Nada is a passive investor and will be a limited partner,
contributing capital to the partnership but not involved in the management of the
business.

As a limited partnership, Real Estate Ventures LP has the following characteristics:

• General Partners: James is the general partner and has unlimited liability for the
debts and obligations of the partnership. He is responsible for managing the real
estate investments, making decisions on behalf of the partnership, and assuming
the risks associated with the business.

• Limited Partners: Nada is a limited partner and has limited liability. She is not
involved in the management of the business and her liability is limited to the extent of
her investment in the partnership. She contributes capital to the partnership and
shares in the profits or losses of the business, but does not have authority to make
decisions or participate in the day-to-day operations.
 • Limited Liability: Limited partners in a limited partnership are protected from
personal liability for the partnership's debts and obligations beyond their capital
contributions, as long as they do not participate in the management of the business.
This means that Nada's personal assets are not at risk beyond her investment in the
partnership.

• Pass-through Taxation: Similar to a general partnership, a limited partnership is not

subject to federal income tax. Instead, the profits, losses, deductions, and credits of
the partnership flow through to the partners' individual tax returns, and each partner
is responsible for reporting their share of the partnership's income or losses on their
individual tax returns.

• General Partner's Management Authority: As the general partner, James has

authority to manage the business, make decisions, and enter into contracts on behalf
of the partnership. He is responsible for the day-to-day operations and assumes the
risks associated with the business.
•
 Class debate
• Students to be divided into teams and argue
for or against the merits of general
partnership or limited partnership.
• Teams have to present arguments and
counterarguments related to the advantages
and disadvantages of each type of
partnership
Duration: 15mn research
Discussion: 15mn
CHAPTER I. COMPANIES OF
SHARES: CORPORATIONS
In Tunisian law, a corporation is a legal entity that is separate from its owners,
meaning it has its own legal personality. This allows it to conduct business
activities, own property, and enter into contracts in its own name. The liability
of the owners or shareholders of a corporation is generally limited to the
amount of their investment in the corporation.

Forms: In Tunisian law, there are several forms of corporations, including:

- Société Anonyme (SA): This is a joint stock company with capital divided into
shares. The shareholders' liability is limited to the amount of their shares. SA is
commonly used for large businesses.
- Société à Responsabilité Limitée (SARL): This is a limited liability company
(LLC) where the liability of the partners is limited to the amount of their
contributions. SARL is commonly used for small and medium-sized enterprises
(SMEs).
- Société Unipersonnelle à Responsabilité Limitée (SUARL): single-member LLC
it similar to the SARL but owned by one person only.
 Joint stock company

As per the article 160 CCC of Tunisia:

A Corporation is a company of shares,
beneficiating with legal personality and
formed of at least 7 members liable only
to the amount of their contributions.
•Share capital: at least 5000 dinars if it is closely held
corporation, and must be at least 50000 Dinars if it is
a publicly held corporation.
•The contribution in the capital of the corporation
gives the right to every shareholder to number of
shares depending on his contributions.
•By opposition to companies of persons, the
shareholders in a corporation are liable to the extent of
their contributions and the company debts shouldn't

be paid their personal

• Pursuant patrimony.
to
subscription and 161 CCC,
on liberation, shouldthebe capital,
devided after
into shares of atarticle
least one dinar every share.
•Are publicly held corporations, corporations that
issue and transfer securities, appealing for public
funding offering (162
CCC).

•The law of 9-14th-1994 considers as publicly

held
corporations:
• Companies declared as such in their articles
•Companies
of association.
that securities are recognized in
stock of exchange (purse).
• Banks and companies of insurance.
 SECTION. I

CONSTITUTION OF THE
CORPORATION
I. ARTICLES OF ASSOCIATION
Pursuant to article 163 CCC, before any
subscription of the capital, a draft of the signed
articles of association of the company must be
filed the clerkof the of
before the location first
instance inthe head office of
registered court
the of will
corporation.
« Any interested person may ask for
its communication». which be
 II. NOTICE ISSUED IN
OFFICIAL GAZETTE OF THE
REPUBLIC OF
TUNISIA
Pursuant to article 164, before any subscription, a
notice shall be published by founders in the Official
Gazette of the Republic of Tunisia and in two daily
newspapers, (one in Arabic), for information to the
The public.
Article 164 brought mandatory mentions to be put in
that notice:

1)The business name of the future company followed

by its head office
2) The form of the company
3.The amount of the registered capital to be
subscribed
4. The future address
5.The subject of the company briefly indicted
6.The planned duration of the company
6.The place where and when the draft of the
articles of association shall be filed
7.The number of shares to be subscribed in cash,
the amount to be paid immediately
8. The value of shares to be issued
9.A summary description of contributions in kind,
their global valuation
10.The special benefits specified in the draft of
articles of association of the company
12) Conditions of admission to the shareholders’
meetings, and voting rights.

13)Provisions related to the distributions of profits,

to the formation of reserves.

14)Name and Office of the bank that shall receive

funds resulting from subscription.

15) The deadline of subscription

16)Methods to convene the constitutive general

assembly and the place of meeting.
 The note shall be signed by the founders, who
shall indicate their names, first names, domiciles
and nationalities, the business name of the
company, the form of the company, its
headquarter and the amount of its registered
capital.