Sunday, April 25, 2010

DIFFERENCES BETWEEN PARTNERSHIP AND JOINT STOCK COMPANY

Partnership and a company differ in many ways. Following are the main differences between them:

(1) Formation : A partnership is easily format without much expenses. The legal formalities for registration are simple and less time consuming. It is registered under Nepal partnership Act, 2020. A company is incorporated by registration under Company Act 2053. Lots of legal formalities have to be observed for registration of a company.

(2) Legal Entity : A partnership has no distinct legal entity. So the acts of the firm bind the partners and the acts of individual partners ordinarily bind the firm. But the company has a distinct legal entity separate from that of shareholders. It may act in its own right without making shareholders liable for it.


(3) Number of Members : The minimum number of partners in two and maximum number is not prescribed according to Partnership act. In a private company the minimum number of members can be one while the maximum number is fifty. In a public company minimum number is seven while there is the maximum limit.

(4) Liability : In partnership, the liability of the partners is unlimited and they are jointly and severally liable for the debts of the firm. The liability of the shareholders of a company is limited up to the face value of the shares purchased by them.

(5) Existence : A partnership does not have stable life and perpetual existence. But a company has a continuous and perpetual succession. The change of membership or death of bankruptcy of the member does not affects its existence.

(6) Transfer of Shares : A partner can transfer his share only with the consent of all partners. But shareholders of a company enjoy perfect freedom to transfer their shares. However, there is some restriction in a private company.

(7) Management : Every partner has the right to take part in the management of the firm. But in company every shareholder has no right to take part in the management. Instead they elect Board of Directors, who manages the company.

(8) Capital : In partnership, partners invest capital according to their wish and the consent of other partners. The capital of a company is divided into shares. It has no right to issue shares more than the authorized capital.

(9) Final Accounts and Audit : A partnership is not under statutory obligation for the preparation of final accounts and audit the books of accounts. However, final accounts of the company must be prepared, distributed among the shareholders and audited by a qualified auditor.

(10) Dissolution : A partnership is dissolved according to the agreement among partners or by the court. A company is dissolved only through legal procedures.

1 comments:

aparna john said...

Hi,With less formal maintenance and more flexibility to accomplish the owners with Incorporation in Qatar goals in most instances.Thanks.....

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