Differences between Various Forms of Business Organisation

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Partnership and Joint Stock Company

Partnership and Joint Stock Company Difference

Basis

Partnership

Joint Stock Company

Formation

Registration is not compulsory.

Requires many legal formalities.

Operation

Governed by the Partnership Act, 1932

Governed by the Companies Act, 1956

Membership

Minimum is two, maximum is 10 in banking business and 20 in other business

In case of Private Company minimum is 2, maximum is 50;

In case of Public company minimum is 7 and there is no maximum limit.

Legal Status

No separate legal entity

Separate legal entity from that of its members.

Liability

Joint and several to an unlimited extent

Limited face value of shares held.

Management

All or any one on behalf of all partners are entitled to manage.

Board of Directors is authorized to manage.

Transfer of Shares

Consent of all partners is required.

Shares are freely transferable.

Existence

Dissolves with the death, retirement or insanity of a partner.

Perpetual existence; unaffected by death, retirement, insolvency etc. of the shareholders.

Finance

Relatively limited scope for raising finance.

Vast and unlimited scope for raising finance.

Joint Stock Company and Co-Operative Society

Joint Stock Company and Co-Operative Society Difference

Basis

Joint Stock Company

Co-operative Society

Formation

Registered with the Registrar of Companies.

Registered with the Registrar of Co-operative Societies.

Membership

In case of Private Company minimum is 2, maximum is 50;

In case of Public company minimum is 7 and there is no maximum limit.

Minimum membership is 10 and maximum is not fixed.

Purpose

Run a business to earn profit.

To render services to its members in particular and to the society in general.

Operation

Governed by the Companies Act, 1956

Governed by the Co-operative Societies Act, 1912

Management

Managed by Board of Directors, elected by shareholders.

Managed by a Managing Committee elected by members on the basis of one member, one-vote.

Transfer of Interest

Shares are freely transfer able.

Shares are not easily transferable.

Liability

Liability of its members is limited to the value of shares.

Liability of its members is limited but society may opt for unlimited liability.

Payment of Dividend

Rate of dividend is decided by the company every year.

Fixed rate of dividend is payable to its members.