The upcoming discussion will update about the difference between company and a partnership firm.

Difference # Company:

1. A Company is regulated by the Companies Act, 1956.

2. A Company must be registered.

3. A Company has a separate legal existence distinct from its shareholders.


4. The minimum number of persons required to form a private company is 2 and for public company is 7. The maximum memb­ership of a private company is restricted to 50 while there is no such limit for mem­bership of a public company.

5. The share capital of a company can be increased or reduced only in accordance with the provisions of the Indian Compa­nies Act.

6. Death or insolvency of a shareholder does not affect the existence of a company.

7. Shares in a public company are freely tra­nsferable.


8. The liability of a shareholder is limited to the extent of unpaid amount of the shares held by him.

9. Shareholders of a company have the right to enter into contract with the company, is a legal entity which distinct from shareho­lders.

10. The management of company is invested in the hands of the elected representatives of the shareholders, called the Board of Directors.

11. A shareholder is not an agent of the com­pany to make a contract.


12. A Company can carry on only such busi­ness as it is authorized by its Memorandum of Association.

13. Audit of accounts is compulsory.

14. Profit is distributed according to the pro­visions of the articles by the Directors.

15. It comes to an end only when it is wound up according to provisions of the Compa­nies Act, 1956.

Difference # Partnership Firm:


1. A partnership firm is governed by the Partnership Act, 1932.

2. There is no legal obligation to register a partnership firm.

3. A partnership firm has no separate legal existence distinct from its partners.

4. The minimum number of persons required to form a partnership firm is 2 and the maximum number of partners in a banking firm can be 10 and in a trading firm 20.


5. Partners can alter the amount of their capitals by mutual agreement.

6. A partnership firm ceases to exist if any partner retires, dies or declared insolvent.

7. No partner of a firm can transfer his share or interest in the firm without the consent of his co-partners.

8. The partners of a firm are personally liable for all the actions of the partnership firm.


9. In a partnership firm, the partners can contract with other partners but not with the firm.

10. Every partner may take part in its management unless the partnership agreement provides otherwise.

11. Each partner is an agent of the firm to make a contract.

12. Partners can change the nature of their bus­iness by mutual agreement.


13. Audit of account is not compulsory.

14. Profits are shared either equally or in agreed proportion by them.

15. Unless a partnership is entered into for a fixed period, it may be dissolved at any time by any partner.