|
Partnership Firm |
Joint Stock Company |
Meaning |
Partnership firm is controlled by two or more persons called as partners. |
Joint Stock Company is an incorporated voluntary association created by law, having an independent legal status, owned by shareholders and managed by Directors. |
Act |
Partnership firm is governed by Indian Partnership Act, 1932. |
Joint Stock Companies are governed by Indian Companies Act, 2013. |
Membership |
Minimum two partners and Maximum 50 partners. |
Private company Minimum – 2 Maximum – 200Public company Minimum – 7 Maximum – No limit |
Liability |
The liability of partners is unlimited, joint and several. |
The liability of shareholders is limited. Up to the unpaid amount of shares held by them. |
Ownership & Management |
Partners are owners and managers of the firm. |
Joint Stock Company is owned by shareholders of the company and managed by Board of Directors. |
Formation |
The formation is simple and less costly. Only an oral or written agreement is needed between partners. |
Formation of a Joint Stock Company is difficult, costly and time-consuming. |
Stability |
A partnership firm does not enjoy a stable life. Life of the firm is affected by death, insolvency or lunacy of even one partner. |
Joint Stock Company has a long and stable life. It has perpetual succession. Life of the company is not affected by death, insolvency or lunacy of any member or Director. |
Registration |
Registration of a partnership firm is optional. It is compulsory in the State of Maharashtra. |
Registration of a Joint Stock Company is compulsory. |
Legal Status |
A partnership firm has no legal status that is distinct from its members. |
A Joint Stock Company has a separate legal status. |
Transfer of Shares |
A partner can transfer his share only with the consent of other partners. |
Shares of a public company are freely transferable. |
Authority of Members |
A partner has implied authority. He is an agent of the firm. |
A shareholder has no implied authority. |
Winding up |
A partnership firm can be easily dissolved. There are not much legal formalities for winding up the firm. |
A Joint Stock Company can be dissolved only by the court. A proper procedure has to be followed for dissolving the company |