|S.No||Basis of Difference||Partnership||Company|
|1||Regulating Act||Governed by provison of the Indian Pratnership Act 1932||Governed by the provison of Companies Act 1956|
|2||No.Of members||Maximum no in case of banking business is 10 and 20 for other business||No fixed limit in case of public company.In case pf pvt ltd co, maximum is 50 and minimum is 2.Minimum no of members in public co is 7.|
|3||Entity||No separate legal entity distinct from the members composing it.||It is separte legal entity different from its memebers.|
|4||Liability||Each partner has unlimited liability and is personally liable for the debts of the firm.||Shareholders has limited liability.|
|5||Authority of Members||Each partner has an implied authority to bind his co-partneners by acts done within the ordinary course of business.||Shareholders has no such authority.There is no mutual agency between various shareholders.|
|6||Management||All partners are entitled to take part in management.||Board of directors are elected by shareholders.|
|7||Transfer of Interest||Partners cannot transfer his interest without the consent of all the partners.||Pvt co-Depends upon the partnership deed.
Public co-Shareholders can transfer their interest.
|8||Audit||Not necessary if annual turnover is not more than 40 Lakhs.||It is mandatory.|
|9||Registration||May and may not be registered.||Essential for a company to get registered.|
The discussion is about the difference between partnership and company .So let us discuss each point in detail.
1.Regulating Act: Partnership firm is governed by the regulating act of Indian partnership Act 1932 and in Company case it is governed by Company’s Act 1956.
2.Number of Members: There is an ambiguity in number of members in partnership firm . It is stated in the act that in banking business the number of partners is 10 and in other kind of business ,the maximum number is 20.
In company the number of person in private limited company is maximum number is 50 and minimum is 2.Whereas in minimum number in public company is 7.
3.Entity: “Separate legal entity means that a company holds a different identity other than the members of the company”. In partnership firm there is no significance of seperate legal entity. But in the case of company ,a company holds one unique identity of its own. It is treated as one individual.
4.Liability: Each partners in the partnership firm is liable for each of the act in the ordinary course of action.
In the case of the company ,shareholders of the firm are not responsible because as studied earlier , company is different from its owners.It has its own individual identity.
5.Authority of members: Each partners has an implied authority which means that as per the partnership deed(agreement) every partner enjoys his share of authority over the business.
In company, shareholders does not hold any authority over the running of the business.
6.Management: As each partner in partmership firm enjoys authority which gives him right to particpate actively in management.
In company, shareholders appoint board of directors based on the experience and these directors particpate in the management process.
7.Transfer of interest: Once an individal enters into agreement and is entitled as a partner , he cannot transfer his interest without the consent of the others partners.
Whereas in the case of the company, sareholders can transfer their interest.i.e buyingg and selling of the shares.
8.Audit: In a partnership firm , it is not mandatory to go for audit(checking of financial statement by an chartered accountant)of the firm if the turnover is not more than 40 lakhs.
But in the case of the company, it is an essential part. Company must go for annual audit.
9.Registration: A partenrship may and may not be regsitered but is important for a company to be registered under Company’s Act 1956.