Difference between Joint Stock Company and Partnership

This article will help you to learn about the difference between Joint Stock Company and Partnership.

Difference between Joint Stock Company and Partnership

Difference # Joint Stock Company:

1. Organizers and entrepreneurs are separate in Joint Stock Company. The share-holders are entrepreneurs, whereas the paid managers are organizers.

2. It has a limited liability. The liability of share-hold­ers is limited up to the face value of shares.

3. In a joint stock company, shares are transferable. Shares can be easily sold to another person.

4. A joint stock company has legal sanction or exist­ence. Company can sue or can he sue against any illegal activity.

5. A joint stock company has to obtain approval from the Registrar and has to abide by the company rules and regulations.

6. Joint stock companies have long life or are some­what permanent. It makes little difference to the company if any share-holder dies or transfers its shares to others. It is merely a question of change in the ownerships of shares.

7. There is no direct and close relation-ship between the workers and the employer in a joint stock company.

8. Large scale production is adopted in case of joint stock companies.

9. In a joint stock company, all the share-holders are not known to each other.

10. Risk can be taken in case of a joint stock company.

11. More capital can be acquired if need arises, by sell­ing of new shares and debentures in the market.

Difference # Partnership:

1. In partnership, the entrepreneur and organizer is the same person who bears the risk of profit or loss. So, both of them are not separate but the same person.

2. It has unlimited liability. All partners are collec­tively responsible for their liability.

3. Under partnership, shares are not transferable. No partner can transfer his shares to other per­sons.

4. Partnership has no legal existence like a joint stock company.

5. There is no need to obtain any special approval and no obedience of particular rules is needed.

6. Partnership is very short lived and its future is uncertain. Due to misunderstandings on the death of a partner, the business is dissolved.

7. There is direct and close relation-ship between the workers and the employer under partnership.

8. The scale of production is small under partnership.

9. Under partnership, the partners are well ac­quainted with each other.

10. Risk is either not taken or rarely taken under part­nership.

11. It is difficult to increase capital under partnership.