Mentoassociates.com – Legal Articles

1.Company is an artificial legal person. Partnership is not a legal person.

2.Company has perpetual succession. Partnership firm does not have perpetual succession.

3.Company is created by registration under Companies Act. For a partnership firm registration is not compulsory. It is guided by Indian Contract Act and Partnership Act.

4.Private Limited Company shall have at least 2 members and maximum 50 members. Partnership firm shall have at least 2 members and maximum 20 members and for banking business, maximum 10 members.

5.In a private limited company, liability of the members can be limited by shares or by guarantee. Liability of members is unlimited in a partnership firm.
   
6.A member is not an agent of company or of other members. Partner is an agent of firm and other partners.

7.Member cannot bind company by his act.  Partner can bind firm by his act. 
                                                       
8.Ordinary members cannot take part in management of a company. Only director members can take part in management.  Partners can take part in   management of a firm.

9.Private limited company shall have a minimum paid up capital of   Rupees 1,00,000/-(Rupees One Lakh Only) and public limited  company of Rs. 5,00,000/- (Rupees Five Lakh Only). There is no minimum paid up capital for a partnership firm.

10.Shares of a private limited company can be transferred with ease. Partner can transfer his share but the assignee does not become a partner. He is only entitled to share of Profits.

11.A company is an entity distinct from its members. It may own property, make contracts, sue and be sued in its own name.  The property of a firm is   owned by the partners. It can also sue and be sued in the firm’s name and   partners can also be sued individually.

12.A single member cannot wind up a company.  A partnership may be dissolved by any partner at any time.
                                                                  

The Indian Partnership Act, 1932 regulates the law relating to partnership in India. 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 persons who have entered into partnership with one another are called individually ”partners” and collectively a “firm” and the name under which their business is carried on is called the “firm name.” The relation of partnership arises from contract and not from status. If there is no provision for the duration or determination of a partnership, such a partnership is called a “partnership at will”.

The Partners are bound to carry on the business of the firm to the greatest common advantage, to be just and faithful to each other and to render true accounts and full information of all things affecting the firm to any partner. Every partner is liable to indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm.

Every partner has a right to take part in the conduct of the business and every partner is bound to attend diligently to his duties in the conduct of the business. Any differences arising as to ordinary matters connected with the business may be decided by a majority of the Partners. However, a change in the nature of business can be decided only with the consent of all the partners.