Partnership Company

1. Legal person 1. Not a distinct legal person

1. Distinct legal person

2. Creation 2. Creation – by agreement

2. Creation – Elaborate legal formalities

3. Agent 3. Every partner is an agent of other partners

3. Shareholder is not agent of other shareholder

4. Contracting ability

4. Partner cannot contract with his firm

4. Shareholder can contract with his company

5. Min and max no.

5. Maximum no. of partners is 20 (& 10 in case of banking business)

5. Public Ltd. Co.: Min. is seven, No max. no. of shareholders.

Private Ltd. Co.: Min. two, Max. fifty

2Differences Between Partnership & Company

Differences Between Partnership & Company (Contd…)

Partnership Company

6. Transferability 6. Partner cannot transfer his interest without consent of other partners

6. Shares of a company are freely transferable.

7. Liability 7. Partners’ liability for debts of firm is unlimited

7. Shareholder’s liability is limited

8. Property 8. Property is common property of partners

8. Property belongs to company & not to his members (Shareholders)

9. Death/Retirement

9. Death or retirement of partner dissolves the firm

9. Death / Retirement of Shareholder does not dissolve company

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Differences Between Private Ltd. Co. & Public Ltd. Co.

Private Ltd. Co. Public Ltd. Co.

1. Min. no. of Shareholders – 2 1. Min. no. of Shareholders – 7

2. Max. no. of Shareholders – 50 2. No limit on max. no.

3. Must have at least two directors

3. Must have at least three directors

4. Shares are not freely transferable

4. Shares are freely transferable

5. Can commence business as soon as certificate of incorporation is obtained

5. Cannot start business on getting certificate of incorporation but can start business only after obtaining certificate of commencement of business

6. Cannot invite public to subscribe the shares or debentures

6. Approaches public for securing capital by issuing prospectus

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Differences Between Private Ltd. Co. & Public Ltd. Co. (Contd…)

Private Ltd. Co. Public Ltd. Co.

7. Must have words Private Limited in its name

7. Must have the word Limited as the last word in its name

8. Must restrict transferability of shares by Article

8. Cannot impose such restrictions transferability of shares by article

9. Need not hold statutory meeting

9. Must hold a statutory meeting

10.No restrictions on remuneration of directors

10.Legal restrictions on remuneration of directors

11.No restrictions on allotment of shares

11.Number of legal restrictions on allotment of shares

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Differences Between Cash Credit & Overdraft Facilities

Cash Credit Overdraft

1. Pre-existing current a/c is not necessary

1. The borrower must have a current a/c in his name to have this facility

2. Bank opens a new a/c with debit limit decided (based) on projected sales & other factors

2. The current a/c is converted into overdraft a/c with debit limit based on security offered & margin requirements. The balance in a/c may be debit (up to limit)

3. Useful for trade, industry & commerce 3. Useful for an individual or non-trader also

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Differences Between Cash Credit & Overdraft Facilities (Contd…)

Cash Credit Overdraft

4. Given generally against hypothecation of goods and book-debt or pledge of goods

4. Given against security of FDR, UTI units, LIC policy, Govt. securities like NSC, IVP, KVP etc

5. Monitoring by way of obtaining stock/book debt statements every month from which drawing power under the limit is calculated every month. Borrower is allowed to withdraw funds as per limit or drawing power, whichever is less

5. No such monitoring is done except when shares are pledged wherein share prices are closely monitored by banker & in case of big decrease in share prices, limit is either reduced or additional security is asked for

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