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Chapter 7
Company versus partnership
Company General Partnership
Separate legal person, i.e. can own Not a separate legal person – the
property, sue or be sued, and contract in partners own any property, are liable on
own name. contracts and are liable if sued.
The company is liable for its debts. (No The partners are personally liable for the
personal liability for shareholders debts of the firm. Their liability is joint
beyond any unpaid portion of the and several.
nominal value of their shares or the
amount they have agreed to contribute.)
Created by registration – with a written No special formality required to create.
constitution.
Shares are transferable. Limits on transfer of share (may require
dissolution of partnership or consent of
other partners to enable partners to
realise their share).
Can create both fixed and floating Can only create fixed charges as
charges as security for borrowing. security for borrowing.
Managed by directors, who may or may Managed by partners, who are also the
not also be shareholders. owners of the business.
The company cannot usually return Partners may withdraw their capital.
capital to its members (except on
dissolution).
Must make information about financial Private business. No disclosure of
affairs and ownership publicly available. results.
The business is run by the directors. Every partner has the right to take part in
Members have no right to participate. the management of the business.
Must comply with Companies Act No administrative requirements
requirements concerning meetings. regarding meetings.
Formal dissolution procedure (known as May dissolve by agreement.
liquidation). Death/ bankruptcy of any Automatically dissolved on the
member/director do not dissolve the death/bankruptcy of any partner.
company.
Companies pay corporation tax. Partners pay income tax.
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