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Difference Between Company and Partnership Firm

Company Vs Partnership Firm

DIFFERENCE BETWEEN A PRIVATE LIMITED COMPANY AND A PARTNERSHIP FIRM

A Private Limited Company in accordance with the Companies Act. 1994 and its subsequently amendments, while a partnership is regulated by the Partnership Act. 1932.
The points of the Company Vs Partnership Firm can be summered up as follows:

 

Private Limited Company

Difference

Partnership Firm

Company comes into existence only after registration under the companies act. 1994.

 Registration

In the case of a Partnership Firm, registration in not compulsory.
The number of persons required to form a Private Limited Company is 2 and cannot have more than 50 members.

Member

The number of persons required to form a Partnership Firm is required 2 and for carrying on banking business cannot have more than 10 members and carrying on other types of business cannot have more than 20 members.
Private Limited Company is regarded by law as single person. Company has a legal personality.

Legal Status

Partnership Firm is a collection of Individuals, it is not considered to be a single person.

The property of the Private Limited Company belongs to the Company. A shareholder in his individual capacity cannot bind the company the Company in any way.

Authority

of

Members

The Property of the of a Partnership Firm is the joint property. Each partner has authority to bind the Partnership Firm by his acts.
The Shareholder of a company can enter into contract with the company and can be an employee of the Company.

Contractual Capacity

Partners can contract with other partners but not with the Firm as a whole.
Company is managed by the Board of Directors.

Management

Firm is managed by the partners themselves. The work of management can be distributed among them in any manner they like.
Company has a perpetual succession, the death of insolvency of a member does not affect its existence. It comes to an end only when liquidated according to the provisions of the companies Act. 1994.

Length

of

Existence

In the absence of a contract to the contrary, comes to end when a partner dies or becomes insolvent.
The Liability of the Private Limited Company is Limited.

Liability of Members

The Liabilities of the members of a partnership firm for the debts of the Firm is unlimited.
The creditors of a company are not creditors of the individual shareholders and a decree obtained against a company cannot be executed against any shareholder of the company. It can be only be executed against the assets of the company.

Liabilities

 

The creditors of a firm are creditors of the individual partners, and a decree obtained against a firm can be executed against the individual partners.
The shareholder of a company can ordinarily transfers his share and the transferee become a member of the company.

Transferability

The partner of a firm cannot transfer his interest in the firm to an outsider and make the transferee a partner without the consent of all the other partners.

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