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Distinguish clearly between a company and a partnership.

Joint Stock Company

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The distinction between a company and a partnership is shown in the following table:

S.No.Basis of DistinctionCompanyPartnership
1.Mode of creationBy incorporation.By a written or oral agreement.
2.Legal statusDistinct legal entity separate from members.No separate legal entity different from partners.
3.Number of membersPublic company: Minimum 7, Maximum no limit. Private company: Minimum 2, Maximum 200.Minimum 2, Maximum 50.
4.LiabilityGenerally limited up to face value of shares held or amount of guarantee given.Unlimited joint and several liability.
5.Transferability of interestTransferable without permission of other members.Not transferable without mutual consent of all the partners.
6.ManagementMembers elect directors who manage the company.Generally every partner has the right to take part in management of the firm.
7.Implied agencyA 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.RegistrationCompulsory.Not compulsory.
9.Legal formalitiesFiling of audited accounts compulsory, cannot change its objects without legal procedure.Accounts and audit not compulsory, can change objects freely.
10.DissolutionDoes not dissolve by death, insolvency, lunacy etc. of members.Dissolved by death, insolvency and lunacy of a partner.
11.Governing law in IndiaThe Companies Act, 2013.The Partnership Act, 1932.

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