The main point of distinction between a Company and a Partnership firm are as follow –
1. A company is a distinct person, but a partnership firm is not distinct from the persons who form it.
2. In a partnership, the property of the firm is the property of the individual members who are collectively entitled to it. In case of a company the property of belongs to the company and not the members.
3. The creditors of a partnership firm are creditors of individual partners and a decree against the firm can be executed against the partners jointly and severally. But the creditors of a company can proceed only against the company and not against the members.
4. Partners are the agents of firm, but members of a company are not its agents. Therefore a partner can dispose of the property and incur liabilities so long as he acts in the course of firm’s business. A member of company has no such capacity.
5. A partner can not contract with his firm of which he is partner, whereas a member of company can contract with a company of which he is shareholder.
6. A partner cannot transfer his share and make the transferee member of the firm without the consent of other partners, whereas the shares of a company can ordinarily be transferred without the consent of other shareholders.
7. Restrictions on the powers of a particular partner contained in partnership agreement shall not avail against outsiders , but those contained in the Articles of Associatons of a company are effective against the public because articles of associations of a company is a public document.
8. A partner’s liability is always unlimited whereas the liability of a shareholder of a company is limited either by shares or by guarantee.
9. A company, being creature of law, can only be dissolved as laid down by law, but a partnership firm is the result of of an agreement between the partners and therefore it can be dissolved anytime by agreement.
10. A company has perpetual succession i.e. the death or insolvency of share holder or all of them does not affect the life of the company. On the other hand, a partnership is dissolved on death or insolvency of a partner unless otherwise provided.
11. A partnership form cannot be formed with more than 10 members in the case of banking business and 20 members in case of any other business where as in a public company there must not be less than 7 members and in case of a private company the minimum number is two. There is no restriction as to maximum number of members of a company except in case of a private company which cannot have more than 50 members excluding past and present employees.
12. In the absence of any agreement to the contrary, Every partner has equal right in the conduct of firm’s bussiness. But in case of company, the right of management vest in few members called directors, and the rest of the members do not take active part in the management of the company.
13. A company is legally bound to have its account audited annually by a Chartered Accountant where as the accounts of a partnership firm are audited at the discretion of the partners.
