Difference between Partnership Firm and a Company

PARTNERHIP
COMPANY
AS TO LEGISLATION
Partnership regulated under Partnership Act 1932
Company is regulated under companies Ordinance, 1984
AS TO LEGAL ENTITY
Partnership has no legal entity
Company has separate Legal Entity
AS TO CREATION
Partnership is created by a Simple Agreement
Incorporation of Company required formalities to be observed
AS TO TRANSFER OF SHARE
Partner cannot transfer his shares without the consent of the other Partner
In Company Shares are easily transferable
AS OF MEMBERS
In Partnership Minimum Two Partners and Maximum Twenty Partners are allowed
In a Company the Members Minimum Two and maximum according to the shares.
AS TO LIABILITY
Partners has unlimited liability under Partnership Firm
Liability under Company is limited to the value of Shares.
AS TO MANAGEMENT
In Partnership every Partner may take active part in the Management of the Business
In company Management is carried on by Directors
AS TO AUDIT
Audit is not compulsory by law under Partnership Firm
Audit is Compulsory by law under the Company
DISTRIBUTION OF PROFIT
Profit is distributed among the Partners according to the ratio defined in Partnership Deed
Profit is distributed among Directors according to their shareholding in Company.
AS TO CONTRACT
A Partner cannot make Contract with his Firm
Shareholder can make an Agreement with the Company.
AS TO OWNERSHIPP
IN Partnership Property belongs to Partners
Property belongs to the Company.
AS TO SUCCESSION
In case of Transfer of Share or Inheritance Partnership is seriously affected
Shares of the Companies are transferable to the heirs of member/Shareholders easily.
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