Commercial Applications
Answer
The distinction between a company and a partnership is shown in the following table:
| S.No. | Basis of Distinction | Company | Partnership |
|---|---|---|---|
| 1. | Mode of creation | By incorporation. | By a written or oral agreement. |
| 2. | Legal status | Distinct legal entity separate from members. | No separate legal entity different from partners. |
| 3. | Number of members | Public company: Minimum 7, Maximum no limit. Private company: Minimum 2, Maximum 200. | Minimum 2, Maximum 50. |
| 4. | Liability | Generally limited up to face value of shares held or amount of guarantee given. | Unlimited joint and several liability. |
| 5. | Transferability of interest | Transferable without permission of other members. | Not transferable without mutual consent of all the partners. |
| 6. | Management | Members elect directors who manage the company. | Generally every partner has the right to take part in management of the firm. |
| 7. | Implied agency | A member is not an agent of the company or of other members. | Every partner is an agent of the firm and of other partners. |
| 8. | Registration | Compulsory. | Not compulsory. |
| 9. | Legal formalities | Filing of audited accounts compulsory, cannot change its objects without legal procedure. | Accounts and audit not compulsory, can change objects freely. |
| 10. | Dissolution | Does not dissolve by death, insolvency, lunacy etc. of members. | Dissolved by death, insolvency and lunacy of a partner. |
| 11. | Governing law in India | The Companies Act, 2013. | The Partnership Act, 1932. |
Related Questions
What is a company? Explain its essential characteristics.
"A Joint Stock Company is said to be an artificial person created by law, having a separate entity with a perpetual succession and a common seal." Explain with the help of examples.
Explain the advantages and disadvantages of a Joint Stock Company.
"A Joint Stock Company is the best form of business organisation." Do you agree? Give reasons.