NOTES


CA-Foundation > Business Laws > The Indian Partnership Act, 1932 - Nature of Partnership Contract (Old & New)

State the points of difference between A company and A partnership firm.



Ans.

Distinction between A Company & A Partnership Firm

A company is a legal entity distinct from its shareholders. While a firm is a compendious name for all the partners. Both are forms of business organization:

 

Company

Partnership Firm

Formation

A company comes into existence only after registration under the Companies Act.

A partnership is formed by mutual agreement of all the partners. Registration is not compulsory.

Legal Status

A company has a separate legal entity distinct from its members.

A partnership is collection of individuals. It does not have a separate legal entity.

Number of Members

(i) The minimum number of persons required to form a company is 2 for private company (other than One Person Company) and 7 for public co.

(i) The minimum number of persons required to form a partnership is 2.

 

(ii) There is no maximum limit to the number of members in the case of public company. A private company cannot have more than 200 members.

(ii) As per Companies Act, 2013 the number of partners in a partnership firm carrying on any business should not exceed 50 persons.

Liability of Members

The liability of the members is limited.

The liability of partners is unlimited.

Agency of Members

A shareholder is not an agent of the company nor he is agent of other shareholders

Every partner is the agent of the firm and his partners for the purposes of the business of the firm.

Transfer of shares

Shares can be transferred without the consent of other members. In a private company there are restrictions on transfer of shares.

No partner can transfer his share or interest in the firm without the consent of his co-partners.

Stability

A company has perpetual succession. The death or insolvency of a member does not affects its existence.

A partnership comes to an end on the death and insolvency of its partners.

Management

There is separation of ownership from management. The shareholders do not actually take part in the management of the company. The Board of Directors manage the company.

A partnership firm is managed by partners themselves.

Powers

The general powers of the company are regulated by Memorandum of Association. It is difficult to change the objects.

The partnership agreement (deed) regulates the mutual rights and duties of partners only.

Statutory Obligations

A company is required to comply with various statutory obligation. Such as compulsory audit, the holding of the meetings, the keeping of proper account books and registers, filing of annual returns etc.

A partnership 1 inn is not required to comply with any such statutory obligation.

Interest

A member has no interest in the assets of the company.

A partner has an interest in assets of the partnership.

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Notes of The Indian Partnership Act, 1932 - Nature of Partnership Contract (Old & New)



  1. There can be different kind of partners. State briefly about any five kinds of partners.
    see in detail

  2. Explain the concept of Partnership by holding out.
    see in detail

  3. State the points of difference between A company and A partnership firm.
    see in detail

  4. What constitutes partnership property? Explain.
    see in detail

  5. Rohit is not a partner in a particular firm. But, he represents himself or knowingly permits himself to be represented as a partner of that particular firm to Sanjay, who on the faith of such representation gives credit to the firm. Is Rohit liable as a partner in the firm?
    see in detail


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