Differences between registered companies and partnerships, Business Law and Ethics

Differences between registered companies and partnerships:

The basic differences between registered companies and partnerships are as follows:

(a) Formation

Registration is the legal pre-requisite for the formation of a registered company: Fort Hall Bakery Supply Co v Wangoe (1).

The Partnership Act does not prescribe registration   as a condition precedent to partnership formation.   A partnership may therefore be formed informally or,   if the partners deem it prudent, in writing under   a Partnership Deed or Articles.         

(b) Legal Status

A registered company enjoys the legal status of a body corporate which is conferred on it by the Companies Act.

A partnership is not a body corporate and is non-existent in the contemplation of the law. Such  business as appears to be carried on by it is in fact carried on by the individual partners.

(c) Number of Members

A registered private company must have at least two members under s.4 of the Companies Act and a maximum  of fifty members (excluding current and former  employees of the company who are also its members),  under s.30 of the Act. A public registered company must have at least seven members under s.4 of the Companies Act but without a prescribed upper limit. A partnership cannot consist of more than 20 partners.

(d) Transfer of Shares

Shares in a registered company are freely transferable unless the company's articles  incorporate restrictive provisions.

A partnership has no shares as such but a partner cannot transfer his interest in the firm to a third party unless all the partners have agreed to the   proposed transfer.                  

(e) Management

A company's members have no right to participate in the company's day to day management. Such  management is vested in the board of directors.

Partners have the right to participate in the firm's   day to day management since s.3 of the Partnership Act requires the business to be carried on "in  common". The right of participation in the firm's management is however not given to a partner who has limited his liability for the firm's debts.

 (f) Agency

A member is not, per se, an agent of the company: Salomon v Salomon & Co Ltd (3). A partner is an  agent of the firm because the business is carried on "in common" by the partners themselves. The  Partnership Act, s.7 also expressly provides that every partner is an agent of the firm and his other partners for the purpose of the business of the  partnership.

(g) Liability of Members

A company's member is not personally liable for the company's debts because, legally, they are not his debts.

A partner is personally liable for the firm's debts. This rule has been codified by s.11 of the Partnership Act which provides that "every partner in a  firm is liable jointly with the other partners for all debts and obligations of the firm incurred while he is a partner", unless the partner is a limited partner.

Posted Date: 1/12/2013 2:13:44 AM | Location : United States







Related Discussions:- Differences between registered companies and partnerships, Assignment Help, Ask Question on Differences between registered companies and partnerships, Get Answer, Expert's Help, Differences between registered companies and partnerships Discussions

Write discussion on Differences between registered companies and partnerships
Your posts are moderated
Related Questions
Estoppel - Law of Agency and Partnership Further the basis of estoppel was explained through the court like Spiro v. Lintern  in giving such; "Where a man is below a duty -

UNCTOC gives the right of Confiscation and Seizure to individual states. " 1. States Parties shall adopt, to the greatest extent possible within their domestic legal systems,

Return As To Allotments: Section 54 (1) provides that whenever a company limited by shares or a company limited by guarantee and having a share capital makes any allotment of

QUESTION 1 Arbitration has proved itself to be a valuable scheme in alternative dispute resolution of conflicts. Discuss the advantages and disadvantages of Arbitration as a su

Determine in detail about the credibility factor Let us consider, 'credibility' factor. The law, institutions and other created authorities lead to circumstances that can assur

The impact of behaviour on the policy agenda To see the impact of behaviour, on the policy agenda and outcomes, which is generally not apparent, one way is to focus on the basi

You are an audit manager in Ecco & Co, a firm of Chartered Accountants. At the monthly audit managers' meeting, the following client situation was reviewed and discussed. Ecco &

Question 1: Discuss what types of norms can be used to help judges in their interpretation of statutes. Question 2: Discuss the concepts of originalism and dynamism in

Explain the white paper of parliamentary procedures. White Paper: It sets out the intention of the legislation and takes in account comments which have been received onto

Right to sell - Terms used in Contract With S.14 (a) provides that there is an implied condition such seller has a right for sell the goods and, like in the case of an agreeme