PRIVATE VS PARTNERSHIP

V . Shiva Prakash

141576

Meaning and Definition of a Company

Section 3(1)( i ) of the Companies Act, 2013 defines a company as: “a company formed and registered under this Act or an existing Company”.

‘Existing Company’ means a company formed and registered under any of the earlier Company Laws.

Private Company [Section 3(1)(iii)] A private company means a

company which has a minimum paid up capital of one lakh rupees or such higher paid-up capital as may be prescribed and by its articles :(a) restricts the right to transfer its shares, if any;

(b) limits the number of its members to 200, not including:

Private Company …contd.

(i) persons who are in the employment of the company, and

(ii) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased;

(c) prohibits invitation to the public to subscribe for any shares in or debentures of, the company; and

Private Company …contd.

(d) prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives.

Where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of membership, be treated as a single member.

Public Company [Section 3(1)(iv)] A public company means a company

which:(a) is not a private company [In other

words, it should not have the restrictions of Section 3(1)(iii) in its articles ];

(b) has a minimum paid-up capital of five lakh rupees or such higher paid-up capital, as may be prescribed; and

(c) is a private company, which a subsidiary of a company, which is not a private company.

Indian Partnership

Act 1932

THE INDIAN PARTNERSHIP ACT’ 1932

Section.4 of the Indian Partnership Act, 1932 defines Partnership in the following terms:

“ Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.”

ESSENTIAL ELEMENTS OF A PARTNERSHIP

a.) There must be a contract.

b.) Between two or more persons.

c.) Who agree to carry on business.

d.) With the object of sharing profits.

e.) The business must be carried on by all or any of them acting for all.

Types of Partnership

Partnership at Will(Sec.7)

Particular Partnership(Sec.8)

On the Basis of Duration

KINDS OF PARTNERSHIP:

1.Partnership at will:

Where no provision is made by contract between the partners for the duration of their partnership, the partnership is ‘partnership at will.’

The essence of a partnership at will is that the partners do not fix any term of partnership and are free to break their relationship at their own sweet will. It is a partnership for an indefinite period.

Particular partnership:

When a partnership is formed for a particular period or for a particular venture, it is called particular partnership. In such a case, the partnership is automatically dissolved at the expiry of the fixed term or on the completion of the venture.

Rights of Partners

1. Right to take part in the conduct of the business.

2. Right to be consulted.3. Right to access the books.4. Right to share the profits.5. Right to interest on capital6. Right to interest on advances.7. Right to indemnity.

Maximum Limit on Number of Partners

Section 11 Companies Act provides that the maximum no. of persons, a firm can have:

In case of partnership firm carrying on a banking business

10

In case of partnership firm carrying on any other business

20

If the number of partners exceeds the limit, the partnership firm becomes an illegal association.If an association of persons or firm having members or partners exceeding the Above limit will not be an illegal association if that firm’s objective is not to earn profit.

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