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Compare Difference Between Different Business Entities

                     Partnership Firm        Limited Liability Partnership        Private Company        Public Company


Points Partnership Firm Limited Liability Partnership Private Company Public Company
Registration Registration-Optional Registration is mandatory Registration is mandatory Registration is mandatory
Commencement of Business Partnership firm can commence Business immediately on implied or written agreement between partners LLP can commence Business immediately after issue of Certificate of Incorporation by the Registrar of Companies Private Company can commence Business immediately after obtaining the Certificate of Incorporation Public Company should obtain Certificate of Commencement of Business before commencement of Business
Authority for Registration Registrar of Firms Registrar of LLP, New Delhi Registrar of Companies Registrar of Companies
Share certificate There is no issue of ownership Certificate for capital investment There is no concept of issue of ownership Certificate for Contribution Share Certificate will have to issued within 3 months of issue/allotment of shares Share Certificate will have to issued within 3 months of issue/allotment of shares
Minimum Number of Members Min. no. of partners - 2 Min. no. of partners - 2 Min. no. of Shareholders - 2 Min. no. of Shareholders - 7
Maximum Number of Members Max. no. of Partners:
Banking - 10
Non-Banking - 20
Max. no. of Partners - No Limit Max. no. of Shareholders - 50
Subject to section 3(i)(iii) of Companies Act, 1956
Max. no. of Shareholders - No Limit
Body Corporate Partnership Firm is not a Body Corporate LLP is a Body Corporate Private Company is a Body Corporate Public Company is a Body Corporate
Legal Entity Not an Independent legal entity Is an Independent legal entity distinct from partners Is an Independent legal entity distinct from shareholders Is an Independent legal entity distinct from shareholders
Capablity An Unregistered Partnership Firm can be sued by third party but it cannot sue third parties LLP can sue and be sued in its name Private Company can sue and be sued in its name Public Company can sue and be sued in its name
Share premium There is no concept of issue of shares at premium There is no concept of contribution at premium Shares can be issued at a premium Shares can be issued at a premium
Legal Binding of the Guarantee A guarantee given by a Partnership Firm to a third party in the absence of agreement to the contrary stands revoked in respect of future transactions A guarantee given by a LLP to third party shall continue and be binding on the LLP for future transactions even after the death of a partner A guarantee given by a private company to third party shall continue and be binding on the company for future transactions even after the death of a shareholder A guarantee given by a public company to third party shall continue and be binding on the company for future transactions even after the death of a shareholder
COI Existence of Partnership Firm is determined by Facts Existence is determined by Certificate of Incorporation Existence is determined by Certificate of Incorporation Existence is determined by Certificate of Incorporation
Perpetual Succession Partnership Firm has no perpetual succession LLP has perpetual succession Private Company has perpetual succession Public Company has perpetual succession
Binding Document Partnership in writing is evidenced by Partnership Deed Limited Liability Partnership Agreement Memorandum and Articles of Association Memorandum and Articles of Association
Minor partner A Minor cannot become a Partner but can be admitted to the benefits of Partnership with the consent of all the partners as per .(Section 30 of the Partnership Act 1932) A Minor cannot become a Partner nor admitted to the benefits of LLP since there is no provision in the LLP Act 2008 to this effect A Minor can become a fully paid up shareholder. Share Certificate shall be issued in the Gaurdian’s name A Minor can become a fully paid up shareholder. Share Certificate shall be issued in the Gaurdian’s name
Voting Rights Voting Rights not available One vote per Partner One vote per member on show of hands One vote per member on show of hands
Consent of partners No person can be inducted into partnership firm without the consent of all the existing partners A person can become a partner as per the LLP Agreement and if the LLP Agreement is silent then with the consent of all the existing partners A person can become a shareholder in accordance with the Articles of Association. There is restriction on free transfer of shares A person can become a shareholder subject to Memorandum and Articles of Association. There is no restriction on free transfer of shares
Liability Liability of Partners is unlimited - joint and several Liability of Partners is limited to the extent of Contribution made except under certain circumstances Liability of shareholders is limited to the extent of shares held Liability of shareholders is limited to the extent of shares held
Applicability of section 297 A partnership firm can enter into sale & purchase of materials and service contracts with other firm in which a partner of the firm is also a partner A LLP can enter into sale & purchase of materials, service, and other contracts with other LLP in which a partner of the LLP is also a partner. Restrictions may be imposed by a notification under Section 67 of the LLP Act, 2008 after getting approval of the Parliament for such notification Contract for sale & Purchase of materials and service in respect of interested parties are governed by provisions of Section 297 of the Companies Act, 1956 Provisions of Section 297 are applicable a public companies also but contracts between two public companies do not attract provisions of Section 297
Conduct of business Every Partner has right to take part in the conduct of business Partners can take part in the conduct of business. Designated Partners shall be liable for regulatory and legal compliances as well Only Board of Directors can collectively manage the affairs of the Private Company Only Board of Directors can collectively manage the affairs of the Private Company
Managing Partner Partnership Agreement may provide for Managing Partners appointment Appointment of two Designated Partners is mandatory Appointment of Managing Director is optional Appointment of Managing Director is optional unless the Public Company has minimum paid up capital of Rs.5 crores
Agent A Partner is an Agent of another Partner and of the Firm A Partner is not an Agent of another Partner but is an Agent of the LLP A Shareholder is not an Agent of another Shareholder or of the Private Company A Shareholder is not an Agent of another Shareholder or of the Public Company
Identification Number There is no requirement of obtaining a Identification Number DPIN [Designated Partner Identification Number] shall obtain before a person is appointed as Designated Partner. DIN [Director Identification Number] is mandatory before a person is appointed as a Director Director Identification Number is mandatory before a person is appointed as a Director
Legal Heirs On the death of a partner the legal heirs will be paid the share of the deceased partner based on accounts drawn up as on the date of death of the partner On the death of a partner the legal heirs will be paid based on accounts drawn up as on the date of death of the partner On the death of a shareholder, the legal heir can ask for transmission of shares in his name. Can sell the shares at mutually agreed value to another person subject to Articles of Association On the death of a shareholder, the legal heir can ask for transmission of shares in his name. Can sell the shares at mutually agreed value to another person freely
Rights and duties Mutual rights and duties of Partners are determined by express or implied agreement between partners Mutual rights and duties of Partners of LLP are determined as per LLP Agreement in writing. In the absence, provisions of First Schedule shall be applicable The rights and duties of Shareholders are subject to Companies Act provisions and Articles of Association The rights and duties of Shareholders are subject to Companies Act provisions
Registration fees depend on case to case Maximum registration fee in the case of a LLP is Rs.5,000/- Maximum registration fee for a company having share capital is Rs. 2 Cr Maximum registration fee for a company having share capital is Rs 2 Cr