The Difference Between Company And Partnership

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Partnership or company limited by shares are the two forms of association open to a group of individuals who want to work together with one objective of carrying out trade to make profit or earn a living. Individual members of company are commonly known as shareholders while partnership members are called partners. Most people however don't differentiate between the two.

The differences between company and partnership are:
1. Limited Company has an autonomous legal identity of both ownership of assets and liabilities. With partnership separate legal individual members can be sued as individual for actions of partnership. Partner can be sued for all debt of partnership.

2. Members of company are not in personal capacity agent of company or one another. Directors are company agent for management of its affairs. Members only participate in management by voting at meeting. In partnership absence of agreement to the contract makes each partner is entitled to share in management.

3. Business in which a company can legally engage is limited. It can only act within powers conferred upon it by it's memorandum of association. A partnership can carry on any business that partners may wish. Partnership nominal share exist in partner name only.

4. For company there are statutory provisions (legal documents for public view) regarding its meetings, its accounts and audit arrangement/results. A certain amount of information has to be made available to public. There are fewer such requirements for partnership.

5. Company enjoys perpetual succession. It does not come to an end or bankruptcy with death of individual members. Partnership comes to an end with death of a member and remaining partner wishing to continue with partnership must form a new partnership.

6. Number of partners in partnership is normally limited to 20 except for bankers, accountants, stockbrokers or solicitor's partnership where there is no limit.

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