Differentiate between Partnership and Joint stock company
Partnership- Partnership is that form of business organization two or more individuals come together and agree to share profit and losses of the business, which is carried on by them. The individuals who run the business are called partners.
Joint stock company- The simplest way to describe a joint stock company is that it is a business organisation that is owned jointly by all its shareholders. All the shareholders own a certain amount of stock in the company, which is represented by their shares.
Professor Haney defines it as “a voluntary association of persons for profit, having the capital divided into some transferable shares, and the ownership of such shares is the condition of membership of the company.” Studying the features of a joint stock company will clarify its structure.
Difference between Partnership and Joint stock company
1. Minimum No. of Members- Minimum number of members is two in Partnership firm. Whereas in Joint Stock Companies, Minimum number is wo in a private company and seven in a public company.
2. Maximum No. of Members-In a Partnership firm, maximum number of members is 20 in general business and 10 in banking firms. In a Joint Stock Company, maximum number of members is 50 in a private company and there is no maximum limit in public company.
3. Registration Registration of a Partnership firm is not compulsory. Registration of Joint Stock company is compulsory.
4. Separate Legal Existence- Partnership firms has no separate legal existence. Partnership Firm and partners are the same. Joint Stock company has separate legal existence. It is an artificial person created by law.
5. Legislation Partnership firm is regulated under the Partnership Act, 1932. Joint Stock Company is regulated under the Companies Act, 1956.
6. Capital-Huge capital for partnership firm cannot be secured. There is possibility of securing huge capital in case of Joint Stock company.
7. Liability-In a Partnership firm, liability of each partner is unlimited, joint and several. In a Joint Stock Company, liability of each shareholder is limited.
8. Transfer of Shares-Transfer of shares is not possible without the consent of all the partners in a partnership firm. In case of pubic limited companies shares can be transferred freely.
9. Management- Partnership Firm is managed by the partners themselves, in general. In a Joint Stock Company, management will be in the hands of elected directors.
10. Audit of accounts- Audit of accounts of Partnership firm is not necessary. Audit of accounts of Joint Stock Company is compulsory.
11. Flexibility- The objects of the Partnership firm can be changed easily. It is not so easy in case of a Joint Stock Company.
12. Perpetual succession Partnership firm has no continuous existence, Joint Stock Company has continuous existence.
