Question

Differentiate between partnership and company form of business organisation.

Answer 1

$\begin{array}{ccc}\text{Basis}& \text{Partnership}& \text{Company}\\ \text{(1) Formation}& \text{Formed by signing an agreement}& \text{Formed by getting registration}\\ & \text{by all the partners. Registration}& \text{under Companies Act}\\ & \text{is not compulsory.}& \\ \text{(2) Number of members}& \text{Minimum-2 members maximum in case}& \text{Minimum-2 members in case of}\\ & \text{in case of banking 10, in case of}& \text{private company and 7 members}\\ & \text{any other business-20.}& \text{in case of public company. Maximum}\\ & & \text{50 in case of private company.}\\ & & \text{There is no maximum limit}\\ & & \text{on members in public company.}\\ \text{(3) Liability}& \text{Liability partners is unlimited}& \text{The liability of members is limited}\\ & & \text{to the extent of contribution in}\\ & & \text{the share capital.}\\ \text{(4) Transfer of interest}& \text{Transfer of interest is not}& \text{Transfer of interest is possible by}\\ & \text{permitted.}& \text{transfer of shares.}\\ \text{(5) Management}& \text{Managed by all the partners. No}& \text{Managed by highly professionalised}\\ & \text{separate professional managers}& \text{experts \& Board of Directors.}\\ & \text{appointed due to lack of resources.}& \\ \text{(6)Continuity of Business}& \text{Partnership firm gets dissolved on}& \text{Stable and perpetual succession of}\\ & \text{the death insolvency or retirement}& \text{the company as death, insolvency}\\ & \text{of any partner.}& \text{and so on, of members does not affect}\\ & & \text{the existence of company.}\end{array}$