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 |