Difference between Partnership Firm and Joint Stock Company

GP Chudal


Difference between Partnership Firm and Joint Stock Company

Aspect Partnership Firm Joint Stock Company (Company Business)
1. Formation Formed by an agreement between two or more individuals. Created by law through a process of incorporation.
2. Legal Status Not a separate legal entity from its partners. A distinct legal entity separate from its shareholders.
3. Liability Partners have unlimited liability, jointly and severally. Shareholders have limited liability, typically up to the amount invested.
4. Ownership Owned by a group of individuals (partners). Owned by shareholders who hold shares in the company.
5. Number of Owners Typically a smaller number of owners (partners). Can have a large number of shareholders.
6. Transfer of Ownership Transfer of ownership may require the consent of partners. Shares can be easily transferred without affecting the company's operations.
7. Management Management responsibilities are shared among partners. Separation of ownership and management; managed by a board of directors.
8. Decision-Making Decision-making is shared among the partners. Decisions are made by the board of directors on behalf of shareholders.
9. Capital Contribution Capital is contributed by all partners based on agreement. Capital is raised by issuing shares to the public or private investors.
10. Continuity Continuity can be limited, dependent on the partnership agreement and changes in ownership. Generally, has perpetual existence, unaffected by changes in shareholders.
11. Accountability Partners share responsibilities and are mutually accountable. Shareholders have limited accountability; they are not directly involved in day-to-day operations.
12. Regulation Less regulatory compliance compared to companies. Subject to more extensive regulatory requirements and reporting.
13. Public Offering Typically not involved in public offerings of shares. Can issue shares to the public through Initial Public Offering (IPO).

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