Difference between Joint Stock company and Partnership Firm
The difference between the Joint Stock company and the Partnership Firm is listed in the table below:
| Basis of Difference | Partnership Firm | Joint Stock Company |
|---|---|---|
| Number of Members | Minimum number of Partners can be 2, and no restriction for the highest number | Private: minimum 1 and maximum 101 Public: the minimum number is 7 and there is no limit for maximum. |
| Formation | Partnership business can be formed according to Partnership Act 2020 BS and the agreement between the partners. | JSC shall be formed under company act 2063 (Amendment 2074). Joint stock company requires more legal formalities, capital and time for incorporation than partnership. |
| Liability | There is unlimited liability in partnership business | Liability of the shareholders limit up to their capital investment i.e. face value of the share. |
| Transfer of Share | Partners can't transfer share without mutual consents (Agreement) of the other partners. | Public Company: Shareholders can transfer their share to anyone without any consents of other shareholders. Private Company: They can transfer their share to other partners or outsider only after they get the permission/approval from other shareholders. |
| Secrecy | Partnership form are not bound to publish their financial statement (Information) publicly. They can keep secrete | It has to make its account public. Thus maintaining confidentiality in business transaction is difficult. |
| Existence/Certainty | Its existence depends on the continuation of the partners in the business. | The existence of a company is independent to the continuation. Its existence is not affected by the abandonment of its shareholders with any of the reasons like death, insolvency or withdrawal. |
| Legislation/Act | it is registered or renewed under the partnership act 2020. | This company registered/renewed/governed under the company act 2063. |
| Management | The partners may manage a partnership firm | Representative of Shareholders manage the business/organisation. |
| Area of Activities | This type of business are smaller than the joint stock company. | These company are bigger in every aspect of business (Resources, size, management and area of operation). |
| Dissolution | Partnership Firm will generally terminate under the collective consent of the partners. The partners can include the term and procedure of the business termination in their partnership deed (Agreement) | Dissolution of a joint stock company is possible only through legal proceedings. It must follow the lengthy legal procedure which is costly and time consuming. |