General Partnership (Ortakëri e Përgjithshme) in Kosovo

General Partnership (Ortakëri e Përgjithshme)In Kosovo, a General Partnership is a type of business entity established between two or more individuals or legal entities to conduct joint commercial activities. This type of partnership provides a structure where partners have unlimited liability and equal rights in decision-making.

1. Key Features

• Ownership: Formed by at least two partners, who can be individuals or legal entities.

• Liability: All partners are jointly and severally liable for the partnership's debts.

• Legal Status: The partnership does not have a separate legal personality and operates on behalf of the partners.

• Decision-Making: Decisions are generally made unanimously unless otherwise stipulated in the partnership agreement.

2. Advantages

• Simplicity: Easier to establish and manage compared to other business types.

• Resource Sharing: Allows partners to share capital, knowledge, and skills.

• Flexibility: Provides flexibility in management and operations.

• Tax Benefits: Income is added to the personal tax declarations of the partners.

3. Disadvantages

• Unlimited Liability: Partners are personally liable for the partnership's debts with their personal assets.

• Partnership Disputes: Conflicts may arise among partners during decision-making processes.

• Limited Capital: Financing depends on the individual contributions or creditworthiness of the partners.

4. Establishment Process

A. Required Documents

1. Partnership Agreement:

   • Must be prepared in writing and signed by all partners.

   • Should outline rights, responsibilities, profit and loss sharing, decision-making processes, and dissolution terms.

2. Identification Documents:

   • Valid identification documents for all partners.

3. Proof of Address:

   • A declared address for the partnership must be documented (e.g., lease agreement or deed).

B. Application Procedure

1. Name Registration:

   • A name must be chosen for the partnership and should include the term "Ortakëri e Përgjithshme."

   • The name must be registered with the Kosovo Business Registration Agency (ARBK).

2. Submission of Application:

   • The required documents should be submitted to ARBK either in person or through electronic systems.

3. Registration Fees:

   • Applicable service fees must be paid for the business registration process.

C. Unique Business Identification Number (BIN)

• Upon completing registration, a Unique Business Identification Number (BIN) is assigned to the partnership.

5. Operation and Management

A. Partnership Management

• The partnership is jointly managed by the partners.

• Tasks can be divided among partners.

B. Profit and Loss Sharing

• Profits and losses are shared according to the ratios specified in the partnership agreement.

• If not specified, they are shared equally.

C. Liabilities

• Each partner is personally liable to third parties for the partnership’s debts.

• One partner's liability is shared jointly with the others (joint and several liability).

6. Legal Basis

• Article 49: Nature of the Partnership.

• Article 50: Partnership Agreement.

• Article 53: Partners’ Liability.

• Article 57: Authority to Act on Behalf of the Partnership.

• These provisions are regulated under the Kosovo Law on Business Organizations (Law No. 06/L-016).

7. Post-Establishment Obligations

A. Tax Registration

• The partnership must register with the Kosovo Tax Administration and comply with tax regulations.

B. Use of Trade Name

• The registered name of the partnership must be used in all commercial activities.

C. Updates and Notifications

• Changes in the partnership’s address, structure, or activities must be reported to ARBK.

D. Dissolution and Withdrawal

• If a partner wishes to withdraw or the partnership is to be dissolved, this must be done in accordance with the partnership agreement.

8. Example Scenario

Two friends looking to establish a furniture production workshop might choose a General Partnership. By pooling their capital and workforce, they can set up and manage the workshop. However, they must be aware that they are personally liable for the business's debts with their personal assets.

Conclusion

A General Partnership is an effective business model for small and medium-sized joint ventures. However, due to the risk of unlimited liability, it is crucial to carefully draft the partnership agreement and clearly define the rights and obligations of the partners.