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Legal Entity
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A firm is not a legal entity. Therefore, it has no legal identity distinct from the
personalities of
its constituent members.
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A company is considered a separate legal entity distinct from its members. It can sue and can be
sued in its own name.
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Agency
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In a firm, all the partners are an agent for each other, as well as of the firm. It is known as
principle of Mutual Agency
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In a company a member is neither an agent of other members nor agent of company. It means
actions of one member do not bind other member
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Profit Distribution
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The profits of a firm must be distributed among the partners according to the terms stated in
the partnership deed.
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It not obligatory for the company to distribute its profit among its members.
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Liability
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In a partnership, the liability of the partners is unlimited. This means that every partner is
liable for the debts of a firm incurred during the business of the firm. These debts may be
recovered by attaching private property of the individual partner.
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In a company that is limited by shares, the liability of a shareholder is limited to the amount,
if any, unpaid on his shares. In the case of a guarantee company, the responsibility is limited
to the amount for which the shareholder has agreed to be liable. However, there may be companies
where the liability of a member is unlimited.
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Property
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The firm’s property is that which is called a “Joint Estate” of all the partners. It does not
belong to anybody distinct in law from its members.
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In a company, its properties are separated from that of its members who can receive it back only
in the form of a dividend or a refund of the capital.
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Transfer of Shares
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A share in a partnership can’t be transferred to another individual or partner without the
consent of all the partners
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Shares in a company are generally freely transferable. A shareholder may transfer his shares,
subject to the provisions contained in its Articles. In the case of a public limited company
whose shared are quoted on the stock exchange, the transfer of shares is usually restricted.
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Management
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If there is no express agreement formed to the contrary, all the partners of the firm are
entitled to participate in the control.
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Company members are not entitled to participate in management unless they are appointed as a
director. In such a case, they may participate. Members, however, enjoy the right of attending
general meetings and voting where they can decide specific questions such as the election of
directors, appointment of auditors etc by way of Ordinary or special resolution, as the case may
be.
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Membership
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"Section 464 of the Companies Act, 2013 empowers the Center Government to prescribe maximum
number of partners in a firm but the number of partners so prescribed cannot be more than
100.The Central Government has prescribed maximum number of partners in a firm to be 50 vide
Rule 10 of the Companies (Miscellaneous) Rules,2014. Thus, in effect, a partnership firm cannot
have more than 50 members".
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A private company may have up to 200 members but not less than 2. A public company may have how
many ever members but not less than 7.
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Duration of existence
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If no contracts are existing to the contrary, death, retirement or an insolvency of a partner
that results in the dissolution of a firm.
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A company has the advantage of having perpetual succession. It can be wound up by following
legal formalities.
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Audit
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The audit of the accounts of a firm is not compulsory.
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The audit of the accounts of a company is compulsory
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