2

Differences Between Partnership & Company

Partnership

Company

1. Legal person 1. Not a distinct legal

person

1. Distinct legal person

2. Creation

2. Creation by
agreement

2. Creation Elaborate
legal formalities

3. Agent

3. Every partner is an
agent of other
partners

3. Shareholder is not
agent of other
shareholder

4. Contracting
ability

4. Partner cannot
4. Shareholder can
contract with his firm contract with his
company

5.

5. Maximum no. of
partners is 20 (& 10
in case of banking
business)

Min and
max no.

5. Public Ltd. Co.: Min.

is seven, No max. no.
of shareholders.
Private Ltd. Co.:

Differences Between Partnership & Company

3
(Contd)
Partnership

Company

6. Transferability

6. Partner cannot
transfer his
interest without
consent of other
partners

6. Shares of a
company are freely
transferable.

7.

Liability

7. Partners liability
for debts of firm is
unlimited

7. Shareholders
liability is limited

8.

Property

8. Property is
common property
of partners

8. Property belongs
to company & not to
his members
(Shareholders)

9.

9. Death or
Death/Retiremen
retirement of
t
partner dissolves

9. Death /
Retirement of
Shareholder does not

Differences Between Private Ltd. Co. & Public Ltd. 4Co.

Private Ltd. Co.

Public Ltd. Co.

1. Min. no. of Shareholders 2

1. Min. no. of Shareholders 7

2. Max. no. of Shareholders 50

2. No limit on max. no.

3. Must have at least two

directors

3. Must have at least three

directors

4. Shares are not freely

transferable

4. Shares are freely

transferable

5. Can commence business as

soon as certificate of
incorporation is obtained

5. Cannot start business on

getting certificate of
incorporation but can start
business only after obtaining
certificate of commencement
of business

6. Cannot invite public to

subscribe the shares or

6. Approaches public for securing

capital by issuing prospectus

Differences Between Private Ltd. Co. & Public 5Ltd.

Co. (Contd)
Private Ltd. Co.

Public Ltd. Co.

7. Must have words Private

Limited in its name

7. Must have the word Limited as

the last word in its name

8. Must restrict transferability of

shares by Article

8. Cannot impose such

restrictions transferability of
shares by article

9. Need not hold statutory

meeting

9. Must hold a statutory meeting

10.No restrictions on
remuneration of directors

10.Legal restrictions on
remuneration of directors

11.No restrictions on allotment of

shares

11.Number of legal restrictions

on allotment of shares

Differences Between Cash Credit & Overdraft

6
Facilities
Cash Credit

Overdraft

1. Pre-existing current a/c is not

necessary

1. The borrower must have a

current a/c in his name to have
this facility

2. Bank opens a new a/c with

debit limit decided (based) on
projected sales & other factors

2. The current a/c is converted

into overdraft a/c with debit
limit based on security offered
& margin requirements. The
balance in a/c may be debit
(up to limit)

3. Useful for trade, industry &

commerce

3. Useful for an individual or nontrader also

Differences Between Cash Credit & Overdraft Facilities

7
(Contd)

Cash Credit
4. Given generally against
hypothecation of goods and
book-debt or pledge of goods

Overdraft
4. Given against security of FDR,
UTI units, LIC policy, Govt.
securities like NSC, IVP, KVP
etc

5. Monitoring by way of obtaining 5. No such monitoring is done

stock/book debt statements
except when shares are
every month from which
pledged wherein share prices
drawing power under the limit
are closely monitored by
is calculated every month.
banker & in case of big
Borrower is allowed to
decrease in share prices, limit
withdraw funds as per limit or
is either reduced or additional
drawing power, whichever is
security is asked for
less