Question

Give two points of distinction between a company and a partnership.

Distinguish clearly between a company and a partnership.

Answer 1

Sr. No.	Basis of Distinction	Company	Partnership
1.	Mode of creation	A company is created by incorporation.	A partnership is created by a written or oral agreement between the partners.
2.	Legal status	A company has a distinct legal entity separate from its members.	A partnership has no separate legal entity and is different from the partners.
3.	Number of members	Public company: Minimum 7, Maximum – No limit. Private company: Minimum 2, Maximum 200.	Minimum 2, Maximum 50 partners.
4.	Liability	The liability of members is generally limited up to the face value of shares held or the amount of guarantee given.	Partners have unlimited joint and several liability for firm’s debts.
5.	Transferability of interest	Shares are transferable without the permission of other members.	The interest of partners is not transferable without the mutual consent of all partners.
6.	Management	Members elect directors who manage the company.	Generally, every partner has the right to take part in the management of the firm.
7.	Implied agency	A member is not an agent of the company or of other members.	Every partner is an agent of the firm and of other partners.
8.	Registration	Registration of a company is compulsory under the Companies Act, 2013.	Registration of a partnership is not compulsory under the Partnership Act, 1932.
9.	Legal formalities	Filing of audited accounts is compulsory, and the company cannot change its objects without following legal procedure.	Accounts and audit are not compulsory, and partners can change the objects of the firm freely.
10.	Dissolution	A company does not dissolve by death, insolvency, or lunacy of its members.	A partnership is dissolved by the death, insolvency, or lunacy of a partner.
11.	Governing law in India	Governed by The Companies Act, 2013.	Governed by The Partnership Act, 1932.