Partnership and company
Both company and partnership are the means of carrying on business and In both the relation of members is based on a contract or an agreement. Even then following are the main difference in company and partnership.
1. Formation -
Company is formed by registration under the provisions of companies Act. Partnership is created by agreement only. This agreement (or contract) can be written or necessary.
2. Legal entity -
"Company is a legal person, but partnership firm is not a legal person." Partnership firm has no separate entity different from its partners. Group of partners Alone is called partnership firm. Defamation of partnership firm is the defamation of partners and in such circumstances partners can bring the suit of defamation, not the firm. Being a legal person company has its separate different from its members. Company also has got at most all those rights which a legal person has. For example, company can acquire and hold property and can transfer it, it can enter into contract members or with any other person, it can sue and can be sued. For the convenience of partnership firm there is provision in the civil procedure code to sue or to be sued in its name But other rights are not available to a partnership firm, because it is not a legal person.
Firm not being an artificial person cannot enter into partnership with other persons or any other firm and if it does so the partnership shall be deemed to have been entered with all the partners of the firm. But company being an artificial person can do so and in this partnership company shall be deemed to be the partner, not all shareholders. If two companies enter into a partnership between themselves, their mutual rights, duties and liability are controlled by the rules of partnership only.
3. Number of members
No maximum limit of members of a company is prescribed but minimum number is prescribed. There should be at least seven members in a public company and two members in a private company. But there should not be more than twenty members in a partnership firm and not more than ten in banking firm.
4. Liability of members
In company liability of it members (Shareholders) is limited but in partnership firm liability of its members (partners) is unlimited. In company with limited liability, the liability of its members is limited to the extent of the value of shares taken by them. If value of shares has been paid to the company, there is no liability of the shareholder. Creditors of the company can recover their debts from the company only. If limited to the extent of amount guaranteed by them. In partnership firm liabilities of partners are not limited. Every partner is liable for all debts and liabilities of the firm. If money of any creditor is not recovered from the property of the firm, it can be recovered from the personal property of partners. Liability of partners is both joint and several. In partnership the liability of partners is unlimited. In partnership apart from their shares the personal property of partners is also liable for the debts and liabilities of the firm. But in a limited company the liability of shareholder is limited. Shareholders liability is limited to the extent of their share and their personal property is not liable.
5. Transferable Share
Shares of company are transferable , therefore, they can be sold to and person at any time. But partner of a firm cannot transfer his Share or partnership in the firm nor can make him partner of that firm without the consent of other partners.
6. Object and powers
Company can carry on only those trade, commerce, business or undertaking which are described in its memorandum of association. If it does any work other than these, it shall be void for it being I excess of jurisdiction. There is no such prohibition for partnership firm and all partner can at any time make change in their business.
7. Rights and relations of members
Management of company is in the hands of few elected persons, who are called directors. Shareholders have no effective control over directors, because shareholders in the immediate are interested only in the profits of the company. After being elected directors do not remain agents of shareholders, they are the agents of the company and company alone. Only company is liable for their acts, not shareholders. In partnership firm, in the absence of any agreement, all partners are entitled to take part in the management of the business. They work in dual capacity of principle and agent. In connection with the business act done by one partner is deemed to be the act of all partners.
8. Dissolution or winding up
Company has perpetual succession. It never dies. Members may come and go but company remains. Insolvency or death of any member or shareholder does not affect the existence of company. Company is created by registration and it is dissolved by the order of the court. Partnership firm can be dissolved at any time with the consent of partners. In the absence of any agreement on the death or insolvency of any partner partnership ceases.
9. Formation and dissolution
Formation, dissolution, determination of rights and duties of partners of a firm, in the absence of any country intention is done according to the provisions of partnership Act, whereas formation, dissolution, conduct of the business and determination of mutual rights and duties and liabilities of directors and shareholders of a company is done according to the provisions of Indian companies Act.
In partnership there can be at least two partners and at the most 10 partners in case of a firm carrying on banking business and 20 partners in firm carrying on other kind of business, but in the companies Act there is no restriction on the maximum number of shareholders.
10. Death
Death or insolvency of any shareholder has no effect on the existence of a company, because company is an artificial person. On the Death or insolvency of any partner, in the absence of an agreement of country intention the partnership ceases.
Both company and partnership are the means of carrying on business and In both the relation of members is based on a contract or an agreement. Even then following are the main difference in company and partnership.
1. Formation -
Company is formed by registration under the provisions of companies Act. Partnership is created by agreement only. This agreement (or contract) can be written or necessary.
2. Legal entity -
"Company is a legal person, but partnership firm is not a legal person." Partnership firm has no separate entity different from its partners. Group of partners Alone is called partnership firm. Defamation of partnership firm is the defamation of partners and in such circumstances partners can bring the suit of defamation, not the firm. Being a legal person company has its separate different from its members. Company also has got at most all those rights which a legal person has. For example, company can acquire and hold property and can transfer it, it can enter into contract members or with any other person, it can sue and can be sued. For the convenience of partnership firm there is provision in the civil procedure code to sue or to be sued in its name But other rights are not available to a partnership firm, because it is not a legal person.
Firm not being an artificial person cannot enter into partnership with other persons or any other firm and if it does so the partnership shall be deemed to have been entered with all the partners of the firm. But company being an artificial person can do so and in this partnership company shall be deemed to be the partner, not all shareholders. If two companies enter into a partnership between themselves, their mutual rights, duties and liability are controlled by the rules of partnership only.
3. Number of members
No maximum limit of members of a company is prescribed but minimum number is prescribed. There should be at least seven members in a public company and two members in a private company. But there should not be more than twenty members in a partnership firm and not more than ten in banking firm.
4. Liability of members
In company liability of it members (Shareholders) is limited but in partnership firm liability of its members (partners) is unlimited. In company with limited liability, the liability of its members is limited to the extent of the value of shares taken by them. If value of shares has been paid to the company, there is no liability of the shareholder. Creditors of the company can recover their debts from the company only. If limited to the extent of amount guaranteed by them. In partnership firm liabilities of partners are not limited. Every partner is liable for all debts and liabilities of the firm. If money of any creditor is not recovered from the property of the firm, it can be recovered from the personal property of partners. Liability of partners is both joint and several. In partnership the liability of partners is unlimited. In partnership apart from their shares the personal property of partners is also liable for the debts and liabilities of the firm. But in a limited company the liability of shareholder is limited. Shareholders liability is limited to the extent of their share and their personal property is not liable.
5. Transferable Share
Shares of company are transferable , therefore, they can be sold to and person at any time. But partner of a firm cannot transfer his Share or partnership in the firm nor can make him partner of that firm without the consent of other partners.
6. Object and powers
Company can carry on only those trade, commerce, business or undertaking which are described in its memorandum of association. If it does any work other than these, it shall be void for it being I excess of jurisdiction. There is no such prohibition for partnership firm and all partner can at any time make change in their business.
7. Rights and relations of members
Management of company is in the hands of few elected persons, who are called directors. Shareholders have no effective control over directors, because shareholders in the immediate are interested only in the profits of the company. After being elected directors do not remain agents of shareholders, they are the agents of the company and company alone. Only company is liable for their acts, not shareholders. In partnership firm, in the absence of any agreement, all partners are entitled to take part in the management of the business. They work in dual capacity of principle and agent. In connection with the business act done by one partner is deemed to be the act of all partners.
8. Dissolution or winding up
Company has perpetual succession. It never dies. Members may come and go but company remains. Insolvency or death of any member or shareholder does not affect the existence of company. Company is created by registration and it is dissolved by the order of the court. Partnership firm can be dissolved at any time with the consent of partners. In the absence of any agreement on the death or insolvency of any partner partnership ceases.
9. Formation and dissolution
Formation, dissolution, determination of rights and duties of partners of a firm, in the absence of any country intention is done according to the provisions of partnership Act, whereas formation, dissolution, conduct of the business and determination of mutual rights and duties and liabilities of directors and shareholders of a company is done according to the provisions of Indian companies Act.
In partnership there can be at least two partners and at the most 10 partners in case of a firm carrying on banking business and 20 partners in firm carrying on other kind of business, but in the companies Act there is no restriction on the maximum number of shareholders.
10. Death
Death or insolvency of any shareholder has no effect on the existence of a company, because company is an artificial person. On the Death or insolvency of any partner, in the absence of an agreement of country intention the partnership ceases.
0 comments:
Post a Comment