How can I transfer my partnership company

Difference between partner company and company

The Corporate form the company organization has towards the partnership a number of advantages. This is due to the fact that in a partnership firm there must be at least two people who mutually agree to run the business and share the profits or losses in the manner stipulated in the contract. The maximum number of partners a partnership company could have is only 20. This led to the development of society in which there can be any number of members.

The company is an association of people who have come together for a common goal and share their profits and losses. Despite the fact that there are some similarities between the company and the partner company, there are also a number of dissimilarities. In this article, we're going to talk about the difference between affiliate companies and corporations.

Comparison table

Basis of comparisonPartnership companyCompanies
importanceWhen two or more people agree to run a business and share the profits and losses with each other, it is known as a partnership company.A corporation is an association of people who invest money in a common stock to operate a business and shares the company's profits and losses.
Governing lawIndian Partnership Act, 1932Indian Companies Act, 2013
How is it made?The partnership company is founded by mutual agreement between the partners.The company is incorporated by incorporation under the Companies Act.
RegistrationVoluntaryMandatory
Minimum number of participantsTwoTwo in the case of a private company and seven in the case of a public company.
Maximum number of people100 partners200 in the case of a private company and a public company can have an unlimited number of members.
examNot mandatoryMandatory
Management of the groupPartner himselfDirectors
liabilityUnlimitedLimited
Contractual capacityA partnership company cannot conclude contracts in its own nameA company can sue and be sued in its own name.
Minimum capitalNo such requirement1 lakh for private company and 5 lakhs for public company.
Use of the word limitedNo such requirement.Must use the word "limited" or "privately limited".
Legal formalities for dissolution / dissolutionNoYes
Separate legal personNoYes
Mutual agencyYesNo

Definition of the partner company

The type of business organization in which two or more people agree to run the business on behalf of the company or its partners and share profits and losses with one another. There are three main points in this definition:

  • agreement - There must be an agreement between the partners, regardless of oral or written form.
  • Profit - The profit and loss of the company must be distributed among the partners in the specified ratio.
  • Mutual representation - Each partner is a representative of the company as well as the other partners who run the business.

The people are referred to as partners in their individual capacity, while they are collectively referred to as a company. The agreement that sets out the terms of the partnership is known as the "Partnership Deed". However, in the absence of a partnership deed, reference is made to the Indian Partnership Act of 1932. The primary goal of establishing the partnership is to do business.

It should be noted that the partners are responsible for the actions of the company, as the company itself does not have its own identity and the partners are therefore made liable for them. In addition, the partners cannot transfer their shares without the consent of the other partners.

Definition of company

A company is an association of persons incorporated and registered under the Indian Companies Act (2013) or other earlier law. The following are the main characteristics of a company:

  • It's an artificial person.
  • It has its own legal entity.
  • It has limited liability.
  • It has an eternal succession.
  • It has a common seal.
  • It can own property in its own name.

There are two types of company: public company and private company

The company can file a lawsuit in its own name and vice versa. The company is run by its representatives, referred to as directors, who are appointed by the members of the company at the "General Meeting". In addition, there is no restriction on the transferability of shares in the case of a public company. However, when we talk about a public company, there are certain limitations.

Key differences between partner companies and corporations

  1. A partnership is an agreement between two or more people who come together to run a business and share profits and losses together. A company is a registered association, which is also known as an artificial person and has its own identity, a common seal and an eternal succession.
  2. The registration of the partnership company is not mandatory in order to set up a company. it must be registered.
  3. To set up a partnership, there must be at least two partners. To set up a company, there must be at least two members for private companies and seven for public companies.
  4. The maximum number of partners in a partnership company is 100. On the other hand, the maximum number of partners is unlimited in a public company and 200 in a private company.
  5. The next big difference is that there is no minimum capital requirement to start a partnership company. Conversely, the minimum capital requirement for a public company is 5 lakh and for a private company is 1 lakh.
  6. If the partnership company is dissolved, there are no legal formalities. In contrast, a company has many legal formalities to process.
  7. A partnership company can be dissolved by one of the partners. In contrast, the company cannot be wound up by any of the members.
  8. A partnership firm is not required to use the word "Limited" or "Private Limited" at the end of its name, while a company must add the word "Limited" if it is a public company and "Private Limited" if it is a private company.
  9. The liability of the partners is unlimited, while the liability of the company is limited to the extent of the shares held by each member or the guarantee given by them.
  10. Since a company is an artificial person to enter into contracts on their own behalf, members are not liable for the company's actions. In the case of a partnership company, however, a partner can enter into a contract on their own behalf with the mutual consent of the other partners and they can also be sued for the acts performed by the company.

Conclusion

The concept of the company came about due to various disadvantages in the partnership company. For this reason, very few partner companies can be seen these days. It has also developed a new concept of Limited Liability Partnership (LLP).