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Difference between partnership organisation and joint stock company

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An association engaged in a business for profit with ownership interests represented by shares of stock. A joint stock company is financed with capital invested by the members or stockholders who receive transferable shares, or stock. It is under the control of certain selected managers called directors. A joint stock company is a form of partnership, possessing the element of personal liability where each member remains financially responsible for the acts of the company. It is not a legal entity separate from its stockholders. A joint stock company differs from a partnership in that the latter is composed of a few persons brought together by shared confidence.


Define partnership. What are the differences between partnership and Joint Stock Company?

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A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares certificates of ownership. In modern-day corporate law , the existence of a joint-stock company is often synonymous with incorporation possession of legal personality separate from shareholders and limited liability shareholders are liable for the company's debts only to the value of the money they have invested in the company.

Therefore, joint-stock companies are commonly known as corporations or limited companies. Some jurisdictions still provide the possibility of registering joint-stock companies without limited liability. In the United Kingdom and in other countries that have adopted its model of company law, they are known as unlimited companies.

In the United States , they are known simply as joint-stock companies. Ownership refers to a large number of privileges. The company is managed on behalf of the shareholders by a board of directors, elected at an annual general meeting. The shareholders also vote to accept or reject an annual report and audited set of accounts.

Individual shareholders can sometimes stand for directorships within the company if a vacancy occurs, but that is uncommon. The shareholders are usually not liable for any of the company debts that extend beyond the company's ability to pay up to the amount of them. Joint-Stock Companies are separate legal existence which means it has other legal existence rather than the owner.

The earliest records of joint stock company can be found in China during the Tang dynasty — and the Song Dynasty — The Tang dynasty saw the development of ho-pen , the earliest form of joint stock company with an active partner and passive investors. By the Song dynasty this had expanded into the douniu , a large pool of shareholders, with management in the hands of ching-shang , merchants who operated their businesses using investors' funds, with investor compensation based on profit-sharing, reducing the risk of individual merchants and burdens of interest payment.

Finding the earliest joint-stock company is a matter of definition. In more recent history, the earliest joint-stock company recognized in England was the Company of Merchant Adventurers to New Lands , chartered in with shareholders. Muscovy Company , which had a monopoly on trade between Moscow and London , was chartered soon after in The royal charter effectively gave the newly created Honourable East India Company a fifteen-year monopoly on all trade in the East Indies.

That invention enhanced the ability of joint-stock companies to attract capital from investors, as they could now easily dispose of their shares. In , it became the first 'corporation' in intercontinental trade with 'locked in' capital and limited liability. During the period of colonialism , Europeans, initially the British, trading with the Near East for goods, pepper and calico for example, enjoyed spreading the risk of trade over multiple sea voyages.

The joint-stock company became a more viable financial structure than previous guilds or state-regulated companies. The first joint-stock companies to be implemented in the Americas were the London Company and the Plymouth Company. Transferable shares often earned positive returns on equity, which is evidenced by investment in companies like the British East India Company , which used the financing model to manage trade in India.

Joint-stock companies paid out divisions dividends to their shareholders by dividing up the profits of the voyage in the proportion of shares held. Divisions were usually cash, but when working capital was low and detrimental to the survival of the company, divisions were either postponed or paid out in remaining cargo, which could be sold by shareholders for profit. However, in general, incorporation was possible by royal charter or private act , and it was limited because of the government's jealous protection of the privileges and advantages thereby granted.

As a result of the rapid expansion of capital-intensive enterprises in the course of the Industrial Revolution in Britain, many businesses came to be operated as unincorporated associations or extended partnerships , with large numbers of members.

Nevertheless, membership of such associations was usually for a short term so their nature was constantly changing. Consequently, registration and incorporation of companies, without specific legislation, was introduced by the Joint Stock Companies Act Initially, companies incorporated under this Act did not have limited liability, but it became common for companies to include a limited liability clause in their internal rules.

In the case of Hallett v Dowdall , the English Court of the Exchequer held that such clauses bound people who have notice of them. Four years later, the Joint Stock Companies Act provided for limited liability for all joint-stock companies provided, among other things, that they included the word "limited" in their company name. The existence of a corporation requires a special legal framework and body of law that specifically grants the corporation legal personality, and it typically views a corporation as a fictional person, a legal person, or a moral person as opposed to a natural person which shields its owners shareholders from "corporate" losses or liabilities; losses are limited to the number of shares owned.

It furthermore creates an inducement to new investors marketable stocks and future stock issuance. Corporate statutes typically empower corporations to own property, sign binding contracts, and pay taxes in a capacity separate from that of its shareholders, who are sometimes referred to as "members".

The corporation is also empowered to borrow money, both conventionally and directly to the public, by issuing interest-bearing bonds. Corporations subsist indefinitely; "death" comes only by absorption takeover or bankruptcy. According to Lord Chancellor Haldane ,. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation.

This 'directing will' is embodied in a corporate Board of Directors. The legal personality has two economic implications. It grants creditors as opposed to shareholders or employees priority over the corporate assets upon liquidation. Second, corporate assets cannot be withdrawn by its shareholders, and assets of the firm cannot be taken by personal creditors of its shareholders.

The second feature requires special legislation and a special legal framework, as it cannot be reproduced via standard contract law. The regulations most favorable to incorporation include:. In many jurisdictions, corporations whose shareholders benefit from limited liability are required to publish annual financial statements and other data so that creditors who do business with the corporation are able to assess the credit-worthiness of the corporation and cannot enforce claims against shareholders.

That requirement generally applies in Europe, but not in common law jurisdictions, except for publicly traded corporations for which financial disclosure is required for investor protection.

In many countries, corporate profits are taxed at a corporate tax rate, and dividends paid to shareholders are taxed at a separate rate. Such a system is sometimes referred to as " double taxation " because any profits distributed to shareholders will eventually be taxed twice. One solution, followed by as in the case of the Australian and UK tax systems, is for the recipient of the dividend to be entitled to a tax credit to address the fact that the profits represented by the dividend have already been taxed.

The company profit being passed on is thus effectively taxed only at the rate of tax paid by the eventual recipient of the dividend. In other systems, dividends are taxed at a lower rate than other income for example, in the US , or shareholders are taxed directly on the corporation's profits, while dividends are not taxed for example, S corporations in the US.

The institution most often referenced by the word "corporation" is publicly traded , which means that the company's shares are traded on a public stock exchange for example, the New York Stock Exchange or Nasdaq in the United States whose shares of stock of corporations are bought and sold by and to the general public.

Most of the largest businesses in the world are publicly traded corporations. However, the majority of corporations are privately held , or closely held, so there is no ready market for the trading of shares. Many such corporations are owned and managed by a small group of businesspeople or companies, but the size of such a corporation can be as vast as the largest public corporations. Closely held corporations have some advantages over publicly traded corporations.

A small, closely held company can often make company-changing decisions much more rapidly than a publicly traded company, as there will generally be fewer voting shareholders, and the shareholders would have common interests. A publicly traded company is also at the mercy of the market, with capital flow in and out based not only on what the company is doing but also on what the market and even what the competitors, major and minor, are doing. However, publicly traded companies also have advantages over their closely held counterparts.

Publicly traded companies often have more working capital and can delegate debt throughout all shareholders. Therefore, shareholders of publicly traded company will each take a much smaller hit to their returns as opposed to those involved with a closely held corporation.

Publicly traded companies, however, can suffer from that advantage. A closely held corporation can often voluntarily take a hit to profit with little to no repercussions if it is not a sustained loss. A publicly traded company often comes under extreme scrutiny if profit and growth are not evident to stock holders, thus stock holders may sell, further damaging the company. Often, that blow is enough to make a small public company fail.

Often, communities benefit from a closely held company more so than from a public company. A closely held company is far more likely to stay in a single place that has treated it well even if that means going through hard times. Shareholders can incur some of the damage the company may receive from a bad year or slow period in the company profits.

Closely held companies often have a better relationship with workers. In larger, publicly traded companies, often after only one bad year, the first area to feel the effects is the workforce with layoffs or worker hours, wages or benefits being cut.

Again, in a closely held business the shareholders can incur the profit damage rather than passing it to the workers. The affairs of publicly traded and closely held corporations are similar in many respects. The main difference in most countries is that publicly traded corporations have the burden of complying with additional securities laws, which especially in the US may require additional periodic disclosure with more stringent requirements , stricter corporate governance standards as well as additional procedural obligations in connection with major corporate transactions for example, mergers or events for example, elections of directors.

A closely held corporation may be a subsidiary of another corporation its parent company , which may itself be either a closely held or a public corporation. In some jurisdictions, the subsidiary of a listed public corporation is also defined as a public corporation for example, in Australia.

In Australia corporations are registered and regulated by the Commonwealth Government through the Australian Securities and Investments Commission. Corporations law has been largely codified in the Corporations Act In Brazil there are many different types of legal entities sociedades , but the two most common ones commercially speaking are i sociedade limitada , identified by "Ltda.

The "Ltda. In Canada both the federal government and the provinces have corporate statutes, and thus a corporation may be incorporated either provincially or federally. Many older corporations in Canada stem from Acts of Parliament passed before the introduction of general corporation law.

The oldest corporation in Canada is the Hudson's Bay Company ; though its business has always been based in Canada, its Royal Charter was issued in England by King Charles II in , and became a Canadian charter by amendment in when it moved its corporate headquarters from London to Canada.

Federally recognized corporations are regulated by the Canada Business Corporations Act. The Chilean form of joint-stock company is called sociedad por acciones often abbreviated "SpA". The latter is a hybrid of the limited partnership and public limited company, having two categories of shareholders, some with and some without limited liability, and is rarely used in practice.

Non-profit corporations may be established under the Civil Code. In Norway a joint-stock company is called an aksjeselskap , abbreviated AS.

A special and by far less common form of joint-stock companies, intended for companies with a large number of shareholders, is the publicly traded joint-stock companies, called allmennaksjeselskap and abbreviated ASA. A joint-stock company must be incorporated, has an independent legal personality and limited liability, and is required to have a certain capital upon incorporation.

Ordinary joint-stock companies must have a minimum capital of NOK 30, upon incorporation, which was reduced from , in Publicly traded joint-stock companies must have a minimum capital of NOK 1 million.

In Spain there are two types of companies with limited liability: i "S. Due to specifics of the Soviet economy, all enterprises in the Soviet republic as the rest of the Soviet Union were state owned and private entrepreneurship was strictly prohibited and criminally prosecuted. Following the Gorbachev initiated broad spectrum reforms perestroika , there was introduced a term of khozraschet and permission for organization of public economic entities called cooperatives. Following dissolution of the Soviet Union , Ukraine's economy along with the rest former Soviet republics was further reformed to more liberal.

What is Partnership? How does it differ from a joint stock company?

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Partnership Firm Joint Stock Company. Basis of Difference.

Hi,With less formal maintenance and more flexibility to accomplish the owners with Incorporation in Qatar goals in most instances. Post a Comment. Copyright bussiness organizations. Blog Templates created by Web Hosting Men. Partnership and a company differ in many ways.

Joint Stock Company

PHI Learning Pvt. Account Options Sign in. Conseguir libro impreso. This text presents an accessible introduction to techniques and applications of economic analysis and financial accounting as a method for approaching real-life business problems for managerial decision making in a logical manner. The book discusses the basic concepts, terminology, and methods that eventually allow students to interpret, analyse, and evaluate actual corporate financial statements. It covers the major areas of managerial economics and financial accounting such as the theory of the firm, the demand theory and forecasting, the production and cost theory and estimation, the market structure and pricing, investment analysis, accountancy, and different forms of business organisations. The book includes numerous examples, problems, self-assessment tests, as well as review questions at the end of each chapter to aid in working out solutions to business problems.

Difference Between Partnership Firm and Company

A company that operates its business by getting combined capital, limited liability, having a distinct personality and perpetual succession by law is called a Joint Stock Company. On the other hand, two or more persons taking unlimited liabilities for the purpose of earning a profit, being operated by all or by one on the behalf of all on the basis of the agreement is called partnership business. Though both businesses are formed by many people, there are many differences between them as well because of the characteristics and the fields of operations or floors of functions are as follows:. From the above discussion, we can say that there are vast differences between the two types of business and hence anyone should study in detail the pros and cons of both companies as well as a partnership before taking any decision on whether to enter into a partnership or incorporate a company. Joint Stock Company is a large, up to date perpetual succession and all over recognized business organization.

A partnership is an association of two or more than two persons who have combined together to share the profits of business carried on by all or any of them acting for all.

The Companies Ordinance has provided. A private company can become public company by altering its articles. Articles should be changed in such a way that it does not contain the provisions required to be included in the articles.

Differences between Partnership Firm and Joint Stock Company

A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares certificates of ownership. In modern-day corporate law , the existence of a joint-stock company is often synonymous with incorporation possession of legal personality separate from shareholders and limited liability shareholders are liable for the company's debts only to the value of the money they have invested in the company.


The company form of business organization enjoys a number of benefits over the partnership. This is due to the fact that, in a partnership firm, there must be at least two persons, mutually agree to run the business and share the profits or losses in a manner prescribed in the agreement. The maximum number of partners a partnership firm could have is only This gave rise to the evolution of Company, in which there can be any number of members. The company is an association of persons who came together for a common objective and share its profit and losses.

Joint-stock company

We can distinguish between partnership and joint stock company by the following ways : 1. Formation :- Partnership : It is formed by a written agreement. Joint stock company : It is formed under the company ordinance. Members :- Partnership : Minimum 2 and maximum 20 members in the partnership. Joint stock company : It has shareholders.

An association engaged in a business for profit with ownership interests Unlike partners in a partnership, a stockholder in a joint stock company has no no effect on the continuation of the organization since both a joint stock company and.

The following are some of the differences between a Partnership firm and Joint Stock Company. Minimum number of members is two in a Partnership firm. Whereas in Joint Stock Companies, Minimum number is two in a private company and seven in a public company. In a Partnership firm, maximum number of members is 20 in general business and 10 in banking firms.







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