The Difference Between Company And Partnership
Partnership or company limited by shares are the two forms
of association open to a group of individuals who want to work together with
one objective of carrying out trade to make profit or earn a living. Individual
members of company are commonly known as shareholders while partnership members
are called partners. Most people however don't differentiate between the two.
The differences
between company and partnership are:
1. Limited
Company has an autonomous legal identity of both ownership of assets and
liabilities. With partnership separate legal individual members can be sued as
individual for actions of partnership. Partner can be sued for all debt of
partnership.
2. Members of
company are not in personal capacity agent of company or one another. Directors
are company agent for management of its affairs. Members only participate in
management by voting at meeting. In partnership absence of agreement to the
contract makes each partner is entitled to share in management.
3. Business in
which a company can legally engage is limited. It can only act within powers
conferred upon it by it's memorandum of association. A partnership can carry on
any business that partners may wish. Partnership nominal share exist in partner
name only.
4. For company
there are statutory provisions (legal documents for public view) regarding its
meetings, its accounts and audit arrangement/results. A certain amount of
information has to be made available to public. There are fewer such
requirements for partnership.
5. Company enjoys
perpetual succession. It does not come to an end or bankruptcy with death of
individual members. Partnership comes to an end with death of a member and
remaining partner wishing to continue with partnership must form a new
partnership.
6. Number of
partners in partnership is normally limited to 20 except for bankers,
accountants, stockbrokers or solicitor's partnership where there is no limit.
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