Differences between Partnership Firm and Joint Stock Company
The following are some of the differences between a Partnership firm and Joint Stock Company.
1. Minimum No. of Members
Minimum number of members is two in a Partnership firm. Whereas in Joint Stock Companies, Minimum number is two in a private company and seven in a public company.
2. Maximum No. of Members
In a Partnership firm, maximum number of members is 20 in general business and 10 in banking firms. In a Joint Stock Company, maximum number of members is 50 in a private company and there is no maximum limit in public company.
Registration of a Partnership firm is not compulsory. Registration of Joint Stock company is compulsory.
4. Separate Legal Existence
Partnership firms has no separate legal existence. Partnership Firm and partners are the same. Joint Stock company has separate legal existence. It is an artificial person created by law.
Partnership firm is regulated under the Partnership Act, 1932. Joint Stock Company is regulated under the Companies Act, 1956.
Huge capital for partnership firm cannot be secured. There is possibility of securing huge capital in case of Joint Stock company.
In a Parternship firm, liability of each partner is unlimited, joint and several. In a Joint Stock Company, liability of each shareholder is limited.
Transfer of shares is not possible without the consent of all the partners in a partnership firm. In case of pubic limited companies shares can be transferred freely.
Partnership Firm is managed by the partners themselves, in general. In a Joint Stock Company, management will be in the hands of elected directors.
10. Audit of accounts
Audit of accounts of Partnership firm is not necessary. Audit of accounts of Joint Stock Company is compulsory.
The objects of the Partnership firm can be changed easily. It is not so easy in case of a Joint Stock Company.
12. Perpetual succession
Partnership firm has no continuous existence. Joint Stock Company has continuous existence.