K.R.

MANGALAM UNIVERSITY

COMPANY LAW
COMPANY AND PARTNERSHIP

SUBMITTED TO: MS. PALKI VATS

SUBMITTED BY:
LALIT KHATANA
BALL 6TH SEMESTER
1805170039
 Partnership and company
  Both company and partnership are the means of carrying on business and In both
the relation of members is based on a contract or an agreement. Even then
following are the main difference in company and partnership.

1. Formation
Company is formed by registration under the provisions of companies Act.
Partnership is created by agreement only. This agreement (or contract) can be
written or necessary.

2. Legal entity  

          "Company is a legal person, but partnership firm is not a legal person."
Partnership firm has no separate entity different from its partners. Group of
partners Alone is called partnership firm. Defamation of  partnership firm is the
defamation of partners and in such circumstances partners can bring the suit of
defamation, not the firm. Being a legal person company has its separate different
from its members. Company also has got at most all those rights which a legal
person has. For example, company can acquire and hold property and can transfer
it, it can enter into contract members or with any other person, it can sue and can
be sued. For the convenience of partnership firm there is provision in the civil
procedure code to sue or to be sued in its name But other rights are not available to
a partnership firm, because it is not a legal person.

Firm not being an artificial person cannot enter into partnership with other persons
or any other firm and if it does so the partnership shall be deemed to have been
entered with all the partners of the firm. But company being an artificial person can
do so and in this partnership company shall be deemed to be the partner, not all
shareholders.
If two companies enter into a partnership between themselves, their mutual rights,
duties and liability are controlled by the rules of partnership only.

3. Number of members

       No maximum limit of members of a company is prescribed but minimum

number is prescribed. There should be at least seven members in a public company
and two members in a private company. But there should not be more than twenty
members in a partnership firm and not more than ten in banking firm.

4. Liability of members

  In company liability of it members (Shareholders) is limited but in partnership

firm liability of its members (partners) is unlimited. In company with limited
liability, the liability of its members is limited to the extent of the value of shares
taken by them. If value of shares has been paid to the company, there is no liability
of the shareholder. Creditors of the company can recover their debts from the
company only.

If limited to the extent of amount guaranteed by them. In partnership firm

liabilities of partners are not limited. Every partner is liable for all debts and
liabilities of the firm. If money of any creditor is not recovered from the property
of the firm, it can be recovered from the personal property of partners. Liability of
partners is both joint and several. In partnership the liability of partners is
unlimited. In partnership apart from their shares the personal property of partners is
also liable for the debts and liabilities of the firm. But in a limited company the
liability of shareholder is limited. Shareholders liability is limited to the extent of
their share and their personal property is not liable.
5. Transferable Share

     Shares of company are transferable , therefore, they can be sold to and person at
any time. But partner of a firm cannot transfer his Share or partnership in the firm
nor can make him partner of that firm without the consent of other partners.

6. Object and powers

            Company can carry on only those trade, commerce, business or undertaking
which are described in its memorandum of association. If it does any work other
than these, it shall be void for it being I excess of jurisdiction. There is no such
prohibition for partnership firm and all partner can at any time make change in
their business.

7. Rights and relations of members

            Management of company is in the hands of few elected persons, who are

called directors. Shareholders have no effective control over directors, because
shareholders in the immediate are interested only in the profits of the company.
After being elected directors do not remain agents of shareholders, they are the
agents of the company and company alone. Only company is liable for their acts,
not shareholders. In partnership firm, in the absence of any agreement, all partners
are entitled to take part in the management of the business. They work in dual
capacity of principle and agent. In connection with the business act done by one
partner is deemed to be the act of all partners.

8. Dissolution or winding up

Company has perpetual succession. It never dies. Members may come and go but
company remains. Insolvency or death of any member or shareholder does not
affect the existence of company. Company is created by registration and it is
dissolved by the order of the court. Partnership firm can be dissolved at any time
with the consent of partners. In the absence of any agreement on the death or
insolvency of any partner partnership ceases.

9.  Formation and dissolution

         Formation, dissolution, determination of rights and duties of partners of a

firm, in the absence of any country intention is done according to the provisions of
partnership Act, whereas formation, dissolution, conduct of the business and
determination of mutual rights and duties and liabilities of directors and
shareholders of a company is done according to the provisions of Indian companies
Act.
     In partnership there can be at least two partners and at the most 10 partners in
case of a firm carrying on banking business and 20 partners in firm carrying on
other kind of business, but in the companies Act there is no restriction on the
maximum number of shareholders.

10. Death

         Death or insolvency of any shareholder has no effect on the existence of a

company, because company is an artificial person. On the Death or insolvency of
any partner, in the absence of an agreement of country intention the partnership
ceases.