Difference between Partnership and Company

Definition
A partnership is defined as the relationship that exists between people carrying on business in
common with the intention of profiting from it, per Section 3 (1) of the Partnership Act of 1961.
The group of partners is referred to as the firm.

A company is any voluntarily organised group of people who are registered as such and who
come together to pursue a single common goal.
Law
The Partnership Act of 1932 governs partnership firms. The Act determines and explains the
status, authority, and liability of the partners in the absence of a contract.
The Companies Act governs and controls a firm.
Liability
Under a partnership, the partners' liability is unbounded. All of the partnership firm's debts are
jointly and severally owed by the partners.
In the event of a limited corporation, the maximum liability of the shareholders is restricted to
the face value of the shares they have purchased. In the case of firms limited by guarantee, the
shareholders are only liable for the amount they personally guaranteed.
Formation
The Partnership Act does not mandate that a partnership entity be registered. An oral or
written agreement is required to form a partnership arrangement. A written contract must be
stamped and registered with Form A if there is one. The agreement will regulate how the
partners interact with one another and will typically represent the arrangements that the
partners have typically accepted, such as management and control, profit and loss sharing, and
contributions. This is for evidentiary purposes, where the document may be offered as evidence
if any things relating to the partnership are presented before a court of law, such as, for
example, a disagreement between the partners occurs.
According to the Companies Act, a corporation must be required to register. Its creation is quite
challenging. However, the Partnership Act does not mandate that a partnership entity be
registered. On the cooperation agreement, the company is built. It is quite simple to form.
Number of members
A partnership must have at least 2 members and a maximum of 20. Following an amendment to
the Act, this maximum number does not apply to the legal profession and accounting profession.
A private corporation can have up to 50 members, but it should only have a minimum of 2.
There is no maximum number of members required for a public business, although there should
be at least 7.
Distinct Legal Persona
It is now established law that a company constituted under the Act is an independent legal
entity separate and distinct from its members as a result of the House of Lords' historic ruling in
Salomon v. A Solomon & Co Ltd.
Unless the Act or a court lifts the veil of incorporation, a member of a company is generally not
personally accountable for the debts or obligations of the company. Members of a corporation
limited by shares, for instance, are responsible for any unpaid dividends on the shares they own
in the event of a winding-up.
Property
In the event of a partnership, the assets of the company are essentially the individual partners'
property, to which they are all legally entitled.
A company's assets are its property alone, not those of its members. Even if a member may
effectively own the entire share capital, it was determined that he did not have an insurable
interest in the company's assets.
Perpetual succession
A partnership is dissolved in the event of the death or bankruptcy of any partner unless there is
agreement between the partners to the contrary.
Section 16(5) provides that a company once incorporated shall have perpetual succession. A
company once incorporated by the law may only be destroyed by a process of the law. The
existence of a company is not affected, for example, by the death, or bankruptcy of any or even
all, of its members.
Management
In a partnership, it is the partners themselves who are in charge of management. They put their
all into their task. They can treat each customer with individual care, fostering a closer bond
between the client and the business.
A group of shareholders' elected representatives, Board of Directors, controls the management
of a firm. Even this group struggles with running the day-to-day operations of the business.
Most of the people that work there are salaried. It is unreasonable to expect such individuals to
participate actively in management as owners.
Transferability of shares
A member of a business has the right to transfer his shares to anybody he pleases, subject to any
limitations that may be imposed by the memorandum and articles. The rules of the Bursa
Malaysia generally forbid the memorandum and articles of a company from containing any
restriction on the right to transfer fully paid shares in the case of a company whose shares are
listed on the exchange.
In contrast, no individual may be added as a partner in a partnership firm without the approval
of all current members.
Borrowing
A company has more options for borrowing money than a partnership organisation does. A
business may establish a fixed or floating charge on its assets as collateral for a loan. Debentures
may also be issued by a business.
A floating charge cannot be made by a partnership entity.
Examination of the accounts
Except in the case of an exempt private business, a firm's yearly accounts must be filed with the
Registrar. The accounts are available for public review because they are public records.
The public cannot see a partnership's accounts through the Registry of Businesses since a
partnership firm is not required to file its yearly accounts there.
Registering process
Incorporating a business is more complicated than registering a partnership firm. Furthermore,
registering a partnership is substantially less expensive. After being incorporated, a company is
required by the Act to periodically file a number of statutory returns.
A partnership business requires fewer formalities to operate, which translates to less publicity
and cheaper running expenses.