Company limited by Share and Partnership

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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