Differences between a Company and Partnership
The principal differences between a company and a partnership are as follows:-
It is regulated by the Companies Act, 1956. It comes into existence after registration under the Companies Act, 1956. A company is a separate legal entity distinct from its members. The property of a company belongs to the company and not to its individual members. Liability of a member of a limited company is limited to unpaid value on shares held (or) the amount of guarantee as mentioned in the memorandum of association. The affairs of the company are managed by its directors, (or) managing directors (or) managers, and its members have no right to take part in the management. A shareholder, subject to restrictions contained in the Articles, can freely transfer his share. A shareholder is not an agent of the company and has no power to bind the company by hid acts. A company's powers are limited to those allowed by the objects clause in its memorandum of association. Articles of association of a company are effective as against the public, as it is a public document and can be inspected by anyone. A company enjoys perpetual succession. Death (or) retirement (or) insolvency of a member does not affect the existence of the company. If a company owes a debt to any of its members he can claim payment out of its assets when it is wound up. The minimum number required to form a company is 2 in the case of private companies and 7 in the case of public companies respectively. There is no limit to the number of members in the case of a public limited company. However, a private company cannot have more than 50 members. The audit of the accounts of a company is obligatory, (i.e.., a legal necessity).
It is regulated by the Indian Partnership Act, 1932. Registration is not compulsory in the case of partnership. A partnership firm has no existence apart from its members. The property of a partnership firm is the joint property of the partners who are collectively entitled to it. The liability of a partner is unlimited, (i.e.., even his own personal assets are liable for the debts of the firm).
Every member of a partnership firm may take part in its management unless the partnership agreement provides otherwise. A partner cannot transfer his interest without the consent of all other partners. Each partner is an agent of the partnership firm to make contracts and to incur liabilities. Each partnership firm can do anything which the partners agreed to do and there is no limit to its activities. Restrictions on the power of the particular partner contained in the partnership agreement will not avail against outsiders. Unless there is a contract to the contrary, death, retirement (or) insolvency of partner results in the dissolution of the partnership firm. A partner who is owed money by his firm cannot prove against the firm’s assets in compensation with its other creditors. The minimum number of persons required to form a partnership firm is two. A partnership cannot be formed with persons exceeding 20, the number is limited to 10 in the case of banking companies. The audit of the accounts of a firm is not compulsory.