M.R.Wazed Chowdhury ( Raihan )
Their are different kinds of business exercises in the business world from the beginning history of business . But two types of business still most popular all over the world of business. Known as "Company business" & Partnership business". Both are intention to acquiring profits through the business . Sometimes people also Guess that both are same kinds & nature. But their is a separate & clear difference between them in according to Law & practical method of carrying those business.
Now i will try to discuss the major differences between a company and partnership are as follows:
As to definition :
A Company may be defined as an association of a number of persons, formed to carry on a business or some common purpose.
But a Partnership is the relationship between of the persons who have agreed to share the profits of a business on by all or any of the acting for all . ( Section-4 of Partnership Act 1932 )
As to Regulating Act :
A Company is governed by the provisions of the Companies Act,1956.
whereas, a partnership firm is governed by the provisions of the Partnership Act,1932.
As to Number of Member :
In case of company their must have minimum two members & public company there is no limit or the maximum number member while in a private company, the number members shall be restricted to fifty
excluding its present and past
employees.
Whereas, In the case of a partnership carrying a banking business, the maximum number of partners can be ten & in the case of any other
business it is 20.
As to Legal Entity :
A company has a separate legal entity hence a company may make contract & legal action against others ,others can also. wheres , A partnership commonly called a firm, has no legal existence apart from its members.
Partners work individually as per their agreement according to the provision of the Partnership Act 1932.
As to Management :
In case of a company, is managed by the board of directors, whom are elected by the share-holders. & the share-holders do not interfere in affairs of the company directly.
whereas in case of a partnership firm is managed by all partners or any one of them acting for all.
As to Liability :
The liability of a share-holder is limited to the nominal amount of the shares held by him.
But in case of Partnership the liability of partner is co-extensive with the whole of his property. Every partner in a firm is jointly and severally liable for all the debts of the firm. whereas their personal wealth can also may be taken for paying the debts.
As to Transfer of Shares:
Prior the permission of the board of directors except private limited companies the shares of public limited companies are freely transferable.
whereas, A partner can not transfer his share & make the transferee a member of the firm without the consent of the others partners.
As to Perpetuality :
A company has perpetual succession. Death, insolvency or the exit of share-holder does not affect the existence of the company. It comes to an end only when it is liquidated according to the provisions of the companies Act.
whereas the death or retirement of partner dissolves the partnership in absence of a contract to the contrary.
As to Contract :
A share-holder may enter into a contract with a company, whereas a partner cant enter into a contract with his firm. However, a partner can
enter into a contract with other partners.
As to Property of Institution :
In the case of company, property belongs to the company and not to its members.
Whereas, the property of a partnership firm belongs to individual partners comprising the firm .
As to Power to Bind :
Except as may be allowed by the articles, a share-holder has no power to bind the company nor to other share-holders,
Whereas, in case of partnership firm a partner can bind the other partners for the act done by anyone of them during the course of business.
As to Creditor :
Creditors of a company are not the creditors of individual share-holders. The can proceed against the
company alone. That's means Creditors cant hold the share-holders directly liable for their amounts.
On the other hand, the creditors of a partnership firm are the creditors of individual partners and a decree obtained against a firm can be enforced against them.
As to Agent:
A share-holder is not an agent of the company or can't bind a company by his acts . whereas, in case of partnership business each partner is an agent of his firm & his partners, & may bind the firm by his act.
As to Alteration of Basic Document:
The company is bound by its articles and memorandum of association.
The power to alter there documents may exercised to a limited extent as per law. whereas, in case of partnership firm agreement being the basic document, may be liable to be altered on the wish of the partners.
As to Registration:
A Company is being a legal entity its registration is a must .
whereas in case of partnership firm may or may not be registered that's means its not compulsory.
As to Statutory obligation:
A company is strictly controlled by the Companies Act . But there are no such statutory obligations in a partnership.
As to Audit :
A company is legally bound to have it's account audited annually by a chartered accountant.
whereas in case of partnership the account of the partnership are audited at the discretion of it's members.
As to Winding up :
A company follows the strict rules & regulation while wound up it's funtion.
whereas in cases of partnership it can be wound up at any time by any partners at any time with mutual consent.
Hope after the above discussion we are able to understand & will decided that their is a far & wide distinction between the 'Company Business' & the 'Partnership Business'.
Thank you !
Writer :- Student of Law at "International Islamic University Chittagong"
ll.braihan@gmail.com
