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Question
Distinguish between the following.
Partnership firm and Joint Stock company
Solution
| Basis of Difference | Partnership Firm | Joint Stock Company |
| Regulating Act | Governed by the Indian Partnership Act 1932 |
Governed by the Companies Act 1956. |
| Number of members | Minimum: 2 Maximum: 10 for banking business and 20 for other businesses |
In case of a private company: Minimum: 2 Maximum: 50 In case of a public company: Minimum: 7 Maximum: No limit |
| Liability | Partners have unlimited liability. |
Shareholders have limited liability to the extent of the unpaid amount on the shares held by them. |
| Management and control |
Management and control are shared by partners. |
Management and control lie in the hands of the managing director. |
| Formation | Easy to form, as there are no legal formalities. |
Difficult to form, as there are many legal formalities. |
| Financial resources | It can raise limited financial resources. |
It can raise a large amount of financial resources. |
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