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Friday, 11 March 2011

Difference or Distinction points between Limited partnership and Private limited company


We discuss about difference or distinction points between Limited partnership and Private limited company under these headings:-

1. Legislation:-
Limited partnership: It is controlled under the limited partnership act 1907.

Private limited company: Its activities are controlled by the Company ordinance 1984.


2. Number of members:-

Limited partnership: There are at least two members and maximum 20 members in case of ordinary business and 10 in the banking partnership.

Private limited company: Minimum members number is 2 but not more than 50.


3. Entity:-

Limited partnership: It has no legal entity. it is not independent of the partners.

Private limited company: It enjoys separate entity and common seal. Its existence is independent of the members.


4. Classification of members:-
Limited partnership: There are two classes of partners in limited partnership i.e. ordinary partners (Unlimited liability partner) and limited liability partner.

Private limited company: There is only one class of members i.e. shareholders with limited liability.


5. Commencement of business:-
Limited partnership: Certifiable of incorporation is not needed by limited partnership. Business can be commenced immediately after agreement.

Private limited company: It can commence business only after obtaining the certificate of incorporation from the registrar's office.


6. Management:-
Limited partnership: Its management is conducted according to the provision of partnership agreement. But generally business is carried on by one two partner is not allowed to participate in the business.

Private limited company: Its procedure of management is laid down in the Article of Association Each member has right to conduct its business personally.


7. Audit:-
Limited partnership: There is no retraction to audit the accounts from the chartered accountant by lass but its depends upon the partnership agreement.

Private limited company: It has to keep the accounts books. Annual audit is compulsory by company ordinance.


8. Limited members:-
Limited partnership: There must be limited partner and one unlimited liability partner for the formation of this type of organization.

Private limited company: It commence its business with at least two members with limited liabilities.


9. Nature of business:-
Limited partnership: Partners may conduct any type of business or change it by mutual consent.

Private limited company: The nature of business is mentioned in the object clause of the Memorandum of Association. It cannot be changed except by the sanction of the court.


10. Submission of documents:-
Limited partnership: No legal documents are required to submitted to the registrar's office before its formation.

Private limited company: Some legal documents i.e. Article of Association are necessary to be submitted to the registrar's office along with other documents before its incorporation.


11. Meeting:-
Limited partnership: There is no compulsion to hold may of meeting under partnership act 1932. No reports are required to be filled with any office.

Private limited company: Some specific meeting must be held with in prescribed time under the provision of company ordinance. Specific reports are to be submitted to concerned office.


12. Capital:-
Limited partnership: Its capital is laid down in Article of partnership ( partnership deed ). It may be changed easily by mutual consent.

Private limited company: Its capital is mentioned in the Memorandum of Association. It cannot be changed without the sanction of the court.


13. Profit:-
Limited partnership: Business profit is distributed among the partners according to the partnership agreement.

Private limited company: The policy of the distribution of the profit is decided at the Board of Directors Meeting according to the Provision of Article of Association.


14. Tax:-
Limited partnership: Tax is the imposed on the individual profit of the partners.

Private limited company: Tax is paid by the company on the whole of its profit.


15. Controlling documents:-
Limited partnership: Its internal management is conducted by partnership deed.

Private limited company: Its internal activities controlled by the Article of Association.


16. Dissolution:-
Limited partnership: Partnership may be dissolved on the retirement or death of any partner. In case of insolvent the insolvency Act applies.

Private limited company: It enjoyed continues existence. Its running business life is not dissolved on the death or retirement of any member. There is separate legal procedure for the winding up of the company insolvency act may not apply.

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