Differences between A Company and A Partnership

A company is a artificial legal person created by law, with Perpetual succession and a common seal.

Whereas partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

The main difference between A Company and Partnership are as follows:

1. A Company is regulated by the Companies Act, 2013 and Partnership is governed by the provision of Indian Partnership Act, 1932.

2. A company comes to existence only when it is registered as per the provision of Companies Act Whereas a Partnership come to existence due to the agreement between two partners, there is no need for a Partnership to be registered. Registration of partnerships is totally optional.

3. At the time of formation of a private company, need to have minimum of 2 member and a public company ,7 member. Whereas a Partnership can be created by 2 persons.

4. The maximum number of members in case of Partnership firm is fixed at 50, but no such limit is prescribed in the case of public company but it shall not exceed 200 in case of private company.

5. A company being artificial person has separate legal identity from its members whereas Partnership firm has no separate legal identity from its members.

6. In the case of company, property belong to company and not to its members, whereas the in Partnership the property belong to individual partners comprising the firm.

7. The Capital of a Partnership firm can be increased or decreased with the mutual consent of partners but in case of Company it required alterations in its MOA which involved legal formalities.

8. In case of company, right to management is vested in the hand of board of directors selected by the shareholder but in Partnership all the partners can take part in management of the business.

9. In company a shareholder can enter into contract with company but in case of Partnership, partner cannot enter into contract with firm.

10. The Regular Aduit of the account of the company is legal necessity, whereas no such requirement is there in the case of Partnership.

11. A shareholder are not the agent of other shareholder but in Partnership, partners have principle and agent relationship in relation to firm.

12. The liability of shareholders are limited to the extent of shares, where as in Partnership the liability of partners is unlimited.

13. In company, shares of public company are freely transferable but in case of Partnership the share cannot be transferred without the consent of his co-partners.

14. A company has perpetual succession; it comes to end only when it is liquidated according to the provision of law. But in case of Partnership, unless otherwise provided, a Partnership comes to an end with the death or insolvency of partner.

15. A Partnership firm can be wound up at the will of the partner, if it is ‘Partnership at will’, where as in Company, no member can call for winding up at his will, winding up of company involves legal formalities.

COMPARISION CHART

BASIS OF COMPARISION	COMPANY	PARTNERSHIP
Regulating Acts	A Company is regulated by the Companies Act, 2013	Partnership is governed by the provision of Indian Partnership Act, 1932.
Existence	A company comes to existence only when it is registered as per the provision of Companies Act	Whereas a Partnership come to existence due to the agreement between two partners, there is no need for a Partnership to be registered.
Minimum Number of Members	At the time of formation of a private company, need to have minimum of 2 member and a public company 7 members.	A partnership can be created by 2 persons.
Maximum Number of Members	No limit is prescribed for number of members in the case of public company, but it shall not exceed 200 in case of private company.	The maximum number of members in case of Partnership firm is fixed at 50
Legal Identity	A company being artificial person has separate legal identity from its members	Partnership firm has no separate legal identity from its members.
Ownership of Property	In the case of company, property belong to company and not to its members	In Partnership the property belongs to individual partners comprising the firm.
Capital	In case of company alterations in its MOA is required in order to increase the capital	The Capital of a Partnership firm can be increased or decreased with the mutual consent of partners
Management	In case of company, right to management is vested in the hand of board of directors selected by the shareholder	in Partnership all the partners can take part in management of the business.
Capacity to Contract	In company a shareholder can enter into contract with company	in Partnership, partner cannot enter into contract with firm.
Inspection of Accounts	The Regular Aduit of the account of the company is legal necessity	The Regular Aduit of the account in Partnership is not necessary
Principe – Agent Relationship	Shareholders are not the agent of another shareholder	partners have principle and agent relationship in relation to firm.
Liability	The liability of shareholders are limited to the extent of shares	in Partnership the liability of partners is unlimited.
Transferability of Share	In company, shares of public company are freely transferable	in Partnership the share cannot be transferred without the consent of his co-partners.
Perpetual Succession	A company has perpetual succession, it comes to end only when it is liquidated	In Partnership, unless otherwise provided, a Partnership comes to an end with the death or insolvency of partner.
Winding Up	in Company, no member can call for winding up at his will, winding up of company involves legal formalities.	A Partnership firm can be wound up at the will of the partner, if it is ‘Partnership at will’