Distinction between company and partnership.

Distinction between Company and Partnership

1. A Partnership firm is sum total of persons who have come together to share the profits of the business carried on by them or any of them. It does not have a separate legal entity. A Company is association of persons who have come together for a specific purpose. The company has a separate legal entity as soon as it is incorporated under law.

2. Liability of the partners is unlimited. However, the liability of shareholders of a limited company is limited to the extent of unpaid share or to the tune of the unpaid amount guaranteed by the shareholder.

3. Property of the firm belongs to the partners and they are collectively entitled to it. In case of a company, the property belongs to the company and not to its members. 

4. A partner cannot transfer his shares in the partnership firm without the consent of all other partners. In case of a company, shares may be transferred without the permission of the other members, in absence of any provision to the contrary in the articles of association of the company.

5. There must be at least 2 members in order to form a partnership firm. The minimum number of members necessary for a public company is seven and two for a private company.

6. On the death of any partner, the partnership is dissolved unless there is provision to the contrary. On the death of the shareholder, the company' existence does not get terminated.