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Difference between Partnership and Company

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Sole proprietorship, Partnering business, Public and Private limited are few forms of business organization. Everyone has different features as well as advantages and disadvantages. Starting a business may be hard without knowledge of a country’s law.

UK Company law may be different from Germany. In general, the basics are the same. In this reading, you’ll be able to analyze the difference between Partnership and Company [Public Limited].

The Difference Difference between Partnership and Company

Partnership
• Easy Formation • Full Liability • Two to Twenty Seven Partners • Unable to Transfer • No Entity • Easy Capital Management • Accounts at own choice • Can manage Business • Distribution in Partners • Audit isn’t mandetory • Easy Termination • Cannot sale business shares • Short Life • No Reports required • Can Change business • Meeting are not necessary
Company
• Complex Formation • Limited Liability • Minimum Seven Members • Easily Transfer • Legal Entity • Share holders acceptance is required • Every thing in accounts • Board of Directors manage business • Distribution in share holders • Audit is mandetory • Hard Dissolution • Can sale business shares • Long Life • Reports required • Can not change it easily • Should do Meetings

1. Formation

Public Limited Company

There is a long and complicated process for the formation of public company. Many legal documents are to be prepared and submitted to the registrar’s office which requires long time.

Partnership

There is a simple process for the formation. No legal documents are necessary. Agreement by oral or written is required only for formation.

2. Liability

Public Limited Company

The liability of share holders is limited to the unpaid value of the share holders are not liable to settle the obligations of the company.

Partnership

It is one from the biggest disadvantages of partnership is that every partner had unlimited liability in his firm. It means that the liability of partners is not limited to the invested amount but private assets are also liable to clear the liabilities of the firm.

3. Number of Members

Public Limited Company

There is no restriction for the maximum numbers of members. It may be million or thousand but not less than seven.

Partnership

It consist of at least two partners but not more than twenty in case of ordinary business and not more than ten in case of banking business.

4. Transferability

Public Limited Company

There is no restriction for transforming of share of public company shareholders may easily dispose of their share in the stock exchange market.

Partnership

A partner cannot transfer his share and interest to another persons without the consent of existing partners.

5. Entity

Public Limited Company

It is created by law and posses separate legal entity. So it can purchase property in its own name. it can sue in its separate position.

Partnership

The partnership’s important feature is to not having separate legal entity from its members. Partners cannot be separated from the firm.

6. Capital

Public Limited Company

Its authorized capital is mentioned in the memorandum of association. It can be increased or decreased by special resolution which is passed in the share holders meeting after the sanction of court.

Partnership

Its capital is described in the agreement. It may be changed by mutual consent of the partners.

7. Maintenance of Books

Public Limited Company

Statutory books and other account books are to be maintained law.

Partnership

There is no compulsion to keep statutory or definite books. Each partner is allowed to inspect and copy the accounts.

8. Legislation

Public Limited Company

The activates of the public companies are controlled by the company ordinance 1984.

Partnership

It is controlled by the partnership Act 1932 which was adopted in our country after partition.

9. Management Authority

Public Limited Company

Share holders who are the actual owners of the company are not allowed to participate in the activities of the company. but board of directors is elected by the share holders which is elected by the share holders which is considered supreme authority of the company. so all the activities are conducted by these persons.

Partnership

Each partner is allowed to conduct personally the business activities. But generally one or two partners are selected to manage the firm.

10. Profit

Public Limited Company

Profit is distributed among the share holders according to the provision of Articles and decision of the Board of Directors.

Partnership

It is distributed among the partners according to partnership deed.

11. Audit

Public Limited Company

Accounts must be audited by the qualified chartered accountant according to the companies ordinance.

Partnership

Audit is not compulsory by law but it depends upon the agreement.

12. Dissolution

Public Limited Company

It cannot to dissolved easily. There is a separate legal process for the winding up of company. it can be wound up according to the provision of company Act.

Partnership

It can be dissolved easily by mutual consent of the partners. It may be dissolved by any one of the partners by serving notice of fourteen days to other partners

13. Right of Issue

Pubic Limited Company

It can issue shares, debentures and other securities to increase its capital and business fund

Partnership

It cannot issue any type of securities in the market to increase its financial sources.

14. Life

Pubic Limited Company

It has continued existence. The life of the directors and shareholders is not connected with running business life of the company. so its activities are not affected by the retirement or death of any shareholders.

Partnership

It does not possess long life. Its business may be affected by the death insolvency or retirement of any partner.

15. Submission of Reports

Pubic Limited Company

Certain documents, statements and reports must be submitted to the government authority.

Partnership

There is no restriction to submit the various reports and documents to any authority.

16. Business

Pubic Limited Company

The promoters are restricted to carry on business which in mentioned in the object clause of memorandum of association.

Partnership

Partners may carry on any type of business and it may easily be changed by mutual consultation.

17. Meeting

Pubic Limited Company

It has to call necessary meetings of shareholders in which problems are disposed of by various resolutions.

Partnership

No compulsion to call any type of meeting and submission of reports to the registrar.

Difference Between Partnership & Public Limited Company

Partnership
• It is controlled under the limited partnership act, 1907 • There are at least two members and a maximum of 20 members in case of ordinary business and 10 in the banking partnership. • It has no legal entity. It is not independent of the partners. • There are two classes of partners in limited partnership i.e. ordinary partners (Unlimited liability partner) and limited liability partnerships. • Certificate of incorporation is not needed by the limited partnership.   Business can be commenced immediately after the agreement • Its management is conducted according to the provision of the partnership agreement. But generally, business is carried on by one or two partners Limited   partner is not allowed to participate in the business • There is no retraction to audit the accounts from the chartered      accountant by lass but it depends upon the partnership agreement • There must be a limited partner and one unlimited liability partner for the formation of this type of organization. • Partners may conduct any type of business or change it by mutual consent. • No legal documents are required to be submitted to the registrar ’s office before its formation. • There is no compulsion to hold any meeting under the Partnership       Act, 1932. No reports are required to be filled with any office. • Its capital is laid down in the Articles of Partnership   (Partnership deed). It may be changed easily to be mutual consent. • Business profit is distributed among the partners according to the partnership agreement. • Tax is imposed on the individual profit of the partners. • Its internal management is conducted by a partnership deed. • The partnership may be dissolved on the retirement or death of any partner. In the case of an insolvent, the Insolvency Act applies
Public Limited company
• Its activities are controlled by the Company ordinance, 1984. • Minimum number of members is two but not more than fifty • It enjoys a separate entity and a common seal. Its existence is independent of the members. • There is only one class of members i.e. shareholders with limited liability. • It can commence business only after obtaining the certificates of incorporation from the register’s office. • It procedure of management is laid down in the Articles of Association Each member has the right to conduct its business personally • It has to keep the accounts books and statutory books. An annual audit is compulsory by Company Ordinance. • It can commence its business with at least two members with limited liabilities • The nature of the business is mentioned in the object clause of the Memorandum of Association. It cannot be changed except by the sanction of the court. • Some legal documents i.e. Articles of Association are necessary to be submitted to the registrar’s office along with other documents before its incorporation • Some specific meeting must be held within prescribed time under the provision of Company ordinance. Specific reports are to be submitted to the concerned office • Its capital is mentioned in the Memorandum of Association. It cannot be changed without the sanction of the court. • The Policy of the distribution of profit is decided at the Board of Directors Meeting according to the provisions Articles of Association. • Tax is paid by the company on the whole of its profit. • Its internal activities are controlled by the Articles of Association. • It enjoys continued existence. Its running business life is not dissolved on the death or retirement of any member. There is a separate legal procedure for the winding up of the company. Insolvency act may not apply.

Difference Between Partnership and Private Limited Company

Limited Partnership
1 • It is controlled under the partnership Act 1932 2 • There are at least two members and a maximum of 20 members in case of ordinary business and 10 in the banking partnership 3 • It is no legal entity. It is not independent of the partners 4 • There are two classes of partners in limited partnership i.e. ordinary partners (unlimited liability partners) and limited liability partner 5 • Certificate of incorporation is not needed by limited partnership. Business can be commenced immediately after agreement 6 • Its management is conducted according to the provision of partnership agreement 7 • But generally business is carried on by one or two partners. Limited partners is not allowed to participate in the business 8 • There is no restriction to audit the accounts from the chartered accountant by law, but it depends upon the partnership agreement 9 • There must be one limited partner and one unlimited liability partner for the formation of this type of organization 10 • Partners may conduct any type of business or change it by mutual consent 11 • No legal documents are required to be submitted to the registrar’s office before its formation 12 • There is no compulsion to hold any kind of meeting under partnership act 1932. No reports are required to be filed with any office 13 • Its capital is laid down in the Articles of partnership (partnership deed) it may be changed easily by mutual consent 14 • Business profit is distributed among he partners according to the partnership agreement 15 • Tax is imposed on the individual profits of the partners 16 • Its internal managements is conducted by partnership deed 17 • Partnership may be dissolved on the retirement or death of any partner. In case of insolvent, the insolvency act applies
Private Limited Company
1 • Its activities are controlled by the companies’ ordinance 1984 2 • A minimum number of members is two but not more than fifty 3 • It enjoys a separate entity and a common seal. Its existence is independent of the members 4 • There is only one class of members i.e. shareholders with limited liability 5 • It can commence business only after obtaining the certificate of incorporation from the registrar’s office 6 • Its procedure of management is laid down in the Articles of Association. Each member has the right to conduct its business personally 7 • It has to keep the accounts books and statutory books. An annual audit from any person is compulsory 8 • It can commence its business with at least two members with limited liabilities 9 • The nature of business is mentioned in the object clause of the Memorandum of Association, it cannot be changed except by the sanction of the court 10 • Some legal documents i.e. Articles of Association and Memorandum of Association are necessary to be submitted to the registrar ’s office along with other documents before its incorporation 11 • Some specific meeting must be held within prescribed time under the provision of Company ordinance. Specific reports are to be submitted to the concerned office 12 • Its capital is mentioned in the memorandum of Association it cannot be changed without the sanction of the court 13 • The policy of the distribution of profit is decided at the Board of directors Meeting according to the provision of Articles of Association 14 • Tax is paid by the company on the whole of its profit 15 • Its internal activates are controlled by the Articles of Association 16 • It enjoys continued existence. Its running business life is not dissolved on the death or retirement of any member. 17 • There is a separate legal procedure for the winding up of the company. insolvency act may not apply.

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