A company is considered an association of number of
individuals, which is established for some common purpose. A company is capable
of holding property, incurring debt and suing and being used in the same manner
as an individual. According to company ordinance, company has been divided into
various kinds and one of these kinds is company limited by share. As company is
different from partnership, therefore there are also some difference between
company limited by share and partnership.Differences between company limited by share and Partnership
Following are the differences between company limited by
share and partnership.
Liability shareholders and Partners
In company limited by share, liability of shareholder is
limited to value of shares, which shareholders purchase. Contrary to this, liability
of partners is unlimited in partnership.
Payment of tax
Company limited by share pays tax on the whole of its profit
while every partner pays tax on his income individually in partnership.
Transfer of Shares
In company limited by share, shares are freely transferable.
Contrary to this, partner cannot transfer his shares without consent of other
partner in partnership.
Concerned Laws
Company limited by share is governed by companies’
ordinance. On the other hand, partnership is governed by Partnership Act.
Distribution of Profit
In company limited by share, profit is distributed according
to its articles of association where as profit is distributed among partners
according to partnership deed in partnership.
Contract of shareholder and Partner
In company limited by share, shareholders can make contract
with company while partners cannot make contract with their firm.
Participation in Management
In company limited by share, directors are to perform task of
management, but each partner can play active role in management of business of partnership.
Concept of Legal Entity
Company limited by share possesses separate legal entity
where as partnership does not have such legal entity.
Books of accounts
In company limited by share, maintenance of books of accounts
is necessary. Contrary to this, it is not essential in partnership that such
books should be maintained.
Conclusion
I say I include that there are also difference between
company limited by share and partnership as far as their lives and end of their
lives are concerned: life of company limited by share is lengthy one while life
of partnership is not lengthy one. To put an end to company limited by share,
specific procedure has been provided in company’s ordinance while partnership
can be easily ended.
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