The major differences between a company and partnership are as follows:
1. As to definition: a Company may be defined as an association of a number of persons, formed for some common purpose. It has a common seal and perpetuity.
On the other hand Partnership is the relationship of the persons who have agreed to share the profits of a business on by all or any of the acting for all (Section-4 of Partnership Act 1932)
2. Legal entity: a company has a separate legal entity distinct from the members who constitute it.
But partnership commonly called a firm, has no legal existence apart from its members. This means that partners and firm are one and same.
Partners work individually as per their agreement according to the
provision of the Partnership Act 1932
3. Liability: the liability of a share-holder is limited to the nominal amount of the shares held by him.
But the liability of partner is co-extensive with the whole of his property. Every partner in a firm is jointly and severally liable for all the debts of the firm.
4. Transfer of shares: except private companies the shares of public companies are freely transferable.
But a partner cant except by agreement with his co-partners; substitute another for himself.
5. Perpetual succession: a company has perpetual succession. Death, insolvency or the exit of share-holder does not affect the existence of the company. It comes to an end only when it is liquidated according to the provisions of the Act.
But the death or retirement of partner dissolves the partnership in absence of a contract to the contrary.
6. Number of member: in a public company there is no limit or the maximum number member while in a private company, the number members shall be restricted to fifty excluding its present and past employees.
On the other hand, in the case of a partnership carrying banking business, the maximum number of partners can be ten and in the case of any other business it is 20.
7. Contract: a share-holder may enter into a contract with a company, whereas a partner cant enter into a contract with his firm. However, a partner can enter into a contract with other partners.
8. Property of Institution: in the case of company, property belongs to the company and not to its members.
Whereas, the property of a partnership firm belongs to individual
partners comprising the firm [Re Geogre Newman & Co (1895)]
9. Power to Bind: except as may be allowed by the articles, a share-holder has no power to bind the company nor to other share-holders,
but in case of partnership a partner can bind the other partners for
the act done by anyone of them during the course of business.
10. Management: in a company, the share-holders do not interfere in affairs of the company directly. It is managed by the board of directors, whom are elected by the share-holders.
But a partnership is managed by all partners or any of them acting for all.
11. Creditor: creditors of a company are not the creditors of individual share-holders. The can proceed against the company alone. Creditors cant hold the share-holders directly liable for their amounts.
On the other hand, the creditors of a partnership firm are the creditors of individual partners and a decree obtained against a firm can be enforced against them.
12. Agent: a share-holder is not an agent of the company whereas a partner is an agent of his firm in connection with partnership business.
13. Alteration of basic document: the company is bound by its articles and memorandum of association. The power to alter there documents may exercised to a limited extent as per law.
But in case of partnership firm agreement being the basic document, may be liable to be altered on the wish of the partners.
14. As to Registration: company being a legal entity its registration
is a must but in case of partnership its not compulsory.
15. Statutory obligation: a company is strictly controlled by the Companies Act. But there are no such statutory obligations in a partnership.
1. As to definition: a Company may be defined as an association of a number of persons, formed for some common purpose. It has a common seal and perpetuity.
On the other hand Partnership is the relationship of the persons who have agreed to share the profits of a business on by all or any of the acting for all (Section-4 of Partnership Act 1932)
2. Legal entity: a company has a separate legal entity distinct from the members who constitute it.
But partnership commonly called a firm, has no legal existence apart from its members. This means that partners and firm are one and same.
Partners work individually as per their agreement according to the
provision of the Partnership Act 1932
3. Liability: the liability of a share-holder is limited to the nominal amount of the shares held by him.
But the liability of partner is co-extensive with the whole of his property. Every partner in a firm is jointly and severally liable for all the debts of the firm.
4. Transfer of shares: except private companies the shares of public companies are freely transferable.
But a partner cant except by agreement with his co-partners; substitute another for himself.
5. Perpetual succession: a company has perpetual succession. Death, insolvency or the exit of share-holder does not affect the existence of the company. It comes to an end only when it is liquidated according to the provisions of the Act.
But the death or retirement of partner dissolves the partnership in absence of a contract to the contrary.
6. Number of member: in a public company there is no limit or the maximum number member while in a private company, the number members shall be restricted to fifty excluding its present and past employees.
On the other hand, in the case of a partnership carrying banking business, the maximum number of partners can be ten and in the case of any other business it is 20.
7. Contract: a share-holder may enter into a contract with a company, whereas a partner cant enter into a contract with his firm. However, a partner can enter into a contract with other partners.
8. Property of Institution: in the case of company, property belongs to the company and not to its members.
Whereas, the property of a partnership firm belongs to individual
partners comprising the firm [Re Geogre Newman & Co (1895)]
9. Power to Bind: except as may be allowed by the articles, a share-holder has no power to bind the company nor to other share-holders,
but in case of partnership a partner can bind the other partners for
the act done by anyone of them during the course of business.
10. Management: in a company, the share-holders do not interfere in affairs of the company directly. It is managed by the board of directors, whom are elected by the share-holders.
But a partnership is managed by all partners or any of them acting for all.
11. Creditor: creditors of a company are not the creditors of individual share-holders. The can proceed against the company alone. Creditors cant hold the share-holders directly liable for their amounts.
On the other hand, the creditors of a partnership firm are the creditors of individual partners and a decree obtained against a firm can be enforced against them.
12. Agent: a share-holder is not an agent of the company whereas a partner is an agent of his firm in connection with partnership business.
13. Alteration of basic document: the company is bound by its articles and memorandum of association. The power to alter there documents may exercised to a limited extent as per law.
But in case of partnership firm agreement being the basic document, may be liable to be altered on the wish of the partners.
14. As to Registration: company being a legal entity its registration
is a must but in case of partnership its not compulsory.
15. Statutory obligation: a company is strictly controlled by the Companies Act. But there are no such statutory obligations in a partnership.
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