Distinguish between the following.
Partnership firm and Joint Stock company
Partnership firm and Joint Stock company
Difference between Partnership Firm and Joint Stock Company
Basis of Difference
Partnership Firm
Joint Stock Company
Regulating Act
Governed by the Indian Partnership Act 1932.
Governed by the Companies Act 1956.
Number of members
Minimum: 2
Maximum: 10 for banking business and 20 for other businesses
In case of a private company:
Minimum: 2
Maximum: 50
In case of a public company:
Minimum: 7
Maximum: No limit
Liability
Partners have unlimited liability.
Shareholders have limited liability to the extent of the unpaid amount on the shares held by them.
Management and control
Management and control are shared by partners.
Management and control lie in the hands of the managing director.
Formation
Easy to form, as there are no legal formalities.
Difficult to form, as there are many legal formalities.
Financial resources
It can raise limited financial resources.
It can raise a large amount of financial resources.
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Difference between Partnership Firm and Joint Stock Company |
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Basis of Difference |
Partnership Firm |
Joint Stock Company |
|
Regulating Act |
Governed by the Indian Partnership Act 1932. |
Governed by the Companies Act 1956. |
|
Number of members |
Minimum: 2 Maximum: 10 for banking business and 20 for other businesses |
In case of a private company: Minimum: 2 Maximum: 50 In case of a public company: Maximum: No limit |
|
Liability |
Partners have unlimited liability. |
Shareholders have limited liability to the extent of the unpaid amount on the shares held by them. |
|
Management and control |
Management and control are shared by partners. |
Management and control lie in the hands of the managing director. |
|
Formation |
Easy to form, as there are no legal formalities. |
Difficult to form, as there are many legal formalities. |
|
Financial resources |
It can raise limited financial resources. |
It can raise a large amount of financial resources. |
