Q. What are the main difference between a company limited by shares and partnership.

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1. Introduction:
A company is an association of a number of individuals formed for some common purpose. a company is capable of holding property, incurring debt and suing and being sued in the same manner as an individual.
2. Definition of company:
Lord Justice Lindley:
A company is a artificial person created by law with a perpetual succession a common seal. it has legal entity, separate from persons composing it. it can sue and be sued in its own name.
3. Company limited by shares:
Company limited by shares is the most important and popular among the registered companies. it is a company which keeps the liability of its members limited upon the values of the shares purchased by them.
Essential:
It is essential for such companies to use the word limited at the end of the names.
Object:
The object of using such name is to inform the people that liability of its members is limited.
4. Definition of partnership:
According to partnership act 1932.
"Partnership is the relation between persons who have agreed to share profit of business carried on by all or any of them acting for all.
5. Features of partnership:
Following are the main features of partnership:
(i) Limited life.
(ii) Unlimited liability.
(iii) Co-ownership of property.
(iv) Participation in income.
(v) Agreement.
6. Distinguished between company and partnership:
I. As to legislation:
Partnership is regulated under partnership act 1932.
Company is regulated under companies ordinance 1984.
II. As to legal entity:
Partnership has no legal entity.
Company has a separate legal entity.
III. As to creation:
Partnership is created by a simple agreement between partners.
The creation of a company requires formalities to observed.
IV. As to transfer of shares:
In partnership a partner can not transfer his shares without the consent of other partner.
In a company, shares are freely transferable.
V. As to members:
In partnership minimum 2 partners and maximum 20 partners.
The partner are minimum 2 and maximum according to the shares. in a company.
VI. As to liability:
Partners have unlimited liability.
Liability in a company is limited to the value of shares purchased.
VII. As to management:
In partnership every partner may take an active part in the management of the business.
In company management is carried on by directors.
VIII. As to capital:
Capital is described in the partnership agreement.
Authorized capital of the company is mentioned in the memorandum of association of the company.
IX. As to audit:
In partnership audit is not compulsory law.
Audit is compulsory by law in a company.
X. As to books of accounts:
In partnership there is no compulsion to maintain the books of accounts.
Books of accounts must be maintained in a company.
XI. As to life:
Partnership does not possess long life.
Company possess a long life.
XII. As to payment of tax:
In partnership each partner pays tax on his income individually.
In case of company tax is paid by the company on the whole profit.
XIII. As to distribution of profit:
In partnership the profit is distributed among the partners according to the partnership deed.
In company profit is distributed according to the article of association.
XIV: As to dissolution:
Partnership can be dissolved easily.
There is separate procedure for dissolution of a company under companies ordinance 1984.
XV. As to contract:
In a partnership a partner cannot contract with his firm.
A shareholder in a company can contract with a company.
7. Conclusion:
To conclude I can say that when two or more than two person carry on a legal business under an agreement it is called partnership. whereas a company is a corporate body. it enjoys a separate entity of its own which is distinct from its member.

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