Companies of Persons: A Model Based on Mutual Trust

Extract

[...] Can partnerships endure durably in their original form? - Introduction and detailed plan « The company is established by two or more persons who agree by a contract to devote to a common enterprise the assets or their industry in order to share the profit or to benefit from the economy that may result from it » This provision of Article 1832 of the Civil Code captures the very essence of a company: a human association founded on a common interest project. [...]

[...] Can companies of persons maintain themselves durably in their original form? To answer this fundamental question, it is essential to consider companies of persons as a model based on mutual trust among partners), before highlighting the congenital limits of this company modelII). A model based on mutual trust among partners, a structuring force The intuitu personae, the founding matrix of partnership societies A bond of essential trust between partners. By placing the person at the heart of the society, theintuitu personae (Literally 'in consideration of the person') offers a certain stability based on mutual trust relationships, where partners unite not so much for their financial contributions, but more so for their reliability and commitment. [...]

[...] Vulnerability and financial risk, the limits of absolute trust Automatic dissolution in case of death or withdrawal of a partner. The dependence of partnership companies on their partners constitutes a major risk to their permanence, in that the death or departure of a partner can lead to their dissolution. The weight of unlimited liability in a crisis situation. If joint and several liability is an essential element of cohesion, it can also expose partners to enormous financial risks, especially in times of economic difficulty. [...]

[...] This type of responsibility strengthens the confidence of creditors, who can rely on the full commitment of partners, which often facilitates access to financing. II- A model put to the test by the inevitable evolutions, symptoms of an intrinsic fragility The structural rigidity, a brake on the permanent evolution of society The constraints of unanimity and the obstacle to the integration of new partners. Unanimity required for any major decision (integration of new partners, transfer of shares) slows down the decision-making processes. [...]