Distinguish between the following:
Joint Stock Company and Partnership Firm.

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Solution

Sr. No Basis of Difference Partnership Firm Joint Stock Company
1. Meaning Two or More persons come together for some business activity & agree to share profit & loss is called partnership firm It is a voluntary association of individuals for profit having capital divided into transferable shares, the ownership which is the condition of membership
2. Membership Partnership firm owned by two or more and maximum 10 in banking and 20 in other firms In private limited company minimum of number of members are 2 and the maximum numbers are 50. In a public limited company, minimum numbers are 7 and no maximum number limit
3. Formation Formation is simple and less costly. only a partnership deed is required. Registration is optional [ except in Maharashtra ] Formation involves many complicated legal formalities. Therefore it is costly legal formalities. Therefore it is tremendously time-consuming
4. Liability The liability of partners is unlimited. Liability of every shareholder is limited to the extent of the unpaid amount on shares held by him
5. Act The partnership is controlled under partnership Act, 1932 Joint stock company is controlled under the Indian Companies Act, 1956

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