COMPARISON BETWEEN PARTNERSHIP , LLP AND COMPANY

COMPARISON BETWEEN PARTNERSHIP , LLP AND COMPANY
CATEGORY	PARTNERSHIP	LLP	COMPANY
PREVAILING LAW	Partnership is prevailed by ‘The Indian Partnership Act, 1932’ and various Rules made there under	Limited Liability Partnership are prevailed by ‘The Limited Liability Partnership Act, 2008’ and various Rules made there under	Companies are prevailed by ‘Companies Act, 1956’
REGISTRATION	Registration is optional	Registration with Registrar of LLP required.	Registration with Registrar of Companies required.
CREATION	Created by Contract	Created by Law	Created by Law
DISTINCT ENTITY	Not a separate legal entity	Is a separate legal entity under the Limited Liability Partnership Act, 2008.	Is a separate legal entity under the Companies Act, 1956.
NAME OF ENTITY	Any name as per choice	Name to contain 'Limited Liability Partnership' or 'LLP' as suffix.	Name to contain 'Limited' in case of Public Company or 'Private Limited' in case of Private Company as suffix.
COST OF FORMATION	The Cost of Formation is negligible	Minimum cost of Formation of LLP is Rs. 800 only, comparatively much lesser than the cost of formation of Company	Minimum Statutory fee for incorporation of Private Company is Rs.6,000/- and minimum Statutory fee for incorporation of Public Company is Rs. 19,000/-
PERPETUAL SUCCESSION	It does not have perpetual succession as this depends upon the will of partners	It has perpetual succession and partners may come and go	It has perpetual succession and members may come and go.
CHARTER DOCUMENT	Partnership Deed is a charter of the firm which denotes its scope of operation and rights and duties of the partners	LLP Agreement is a charter of the LLP which denotes its scope of operation and rights and duties of the partners vis-à-vis LLP.	Memorandum and Article of Association is the charter of the company which defines its scope of operation.
COMMON SEAL	There is no concept of common seal in partnership	It denotes the signature and LLP may have its own common seal, dependant upon the terms of the Agreement	It denotes the signature of the company and every company shall have its own common seal
FORMALITIES OF INCORPORATION	In case of registration, Partnership Deed along with form / affidavit required to be filled with Registrar of firms along with requisite filing fee	Various eForms and the LLP Agreement are filed with the Registrar of LLP along with the prescribed Fee.	Various eforms along the Memorandum & Articles of Association are filled with Registrar of Companies with prescribed fees
TIME LINE	It will take 7 days (approx.) to incorporate	It will take 10 days (approx.) to incorporate (inclusive of time taken to obtain DPN)	It will take 10 days (approx.) to incorporate (inclusive of time taken to obtain DIN)
LEGAL PROCEEDINGS	Only registered partnership can sue third party	A LLP is a legal entity can sue and be sued	A company is a legal entity which can sue and be sued
FOREIGN PARTICIPATION	Foreign Nationals can not form Partnership Firm in India	Foreign Nationals can be a Partner in a LLP.	Foreign Nationals can be a member in a Company.
NUMBER OF MEMBERS	Minimum 2 and Maximum 20	Minimum 2 partners and their is no limitation of maximum number of partners.	2 to 50 members in case of Private Company and Minimum 7 members in case of Public Company.
OWNERSHIP OF ASSETS	Partners have joint ownership of all the assets belonging to partnership firm	The LLP independent of the partners has ownership of assets	The company independent of the members has ownership of assets
RIGHTS / DUTIES / OBLIGATION OF THE PARTNERS / MANAGING PARTNERS / DIRECTORS	Rights / Duties / obligation of the partners are governed by Partnership Deed.	Rights / Duties / obligation of the partners are governed by LLP Agreement.	Rights / Duties / obligation of the directors are governed by AOA and resolution passed by shareholders or directors.
LIABILITY OF PARTNERS/MEMBERS	Unlimited. Partners are severally and jointly liable for actions of other partners and the firm and liability extend to their personal assets.	Limited, to the extent their contribution towards LLP, except in case of intentional fraud or wrongful act of omission or commission by the partner.	Generally limited to the amount required to be paid up on each share.
TAX LIABILITY	Income of Partnership is taxed at a Flat rate of 30% plus education cess as applicable.	Income of LLP is taxed at a Flat rate of 30% plus education cess as applicable.	Income of Company is Taxed at a Flat rate of 30% Plus surcharge as applicable.
PRINCIPAL/AGENT RELATIONSHIP	Partners are agents of the firm and other partners.	Partners act as agents of LLP and not of the other partners.	The directors act as agents of the company and not of the members
TRANSFER / INHERITANCE OF RIGHTS	Not transferable. In case of death the legal heir receives the financial value of share.	Regulations relating to transfer are governed by the LLP Agreement .	Ownership is easily transferable.
TRANSFER OF SHARE / PARTNERSHIP RIGHTS IN CASE OF DEATH	In case of death of a partner, the legal heirs have the right to get the refund of the capital contribution + share in accumulated profits, if any. Legal heirs will not become partners	In case of death of a partner, the legal heirs have the right to get the refund of the capital contribution + share in accumulated profits, if any. Legal heirs will not become partners	In case of death of member, shares are transmitted to the legal heirs.
DIRECTOR IDENTIFICATION NUMBER(DIN)	The partners are not required to obtain any identification number	Each Designated Partners is required to have a DIN before being appointed as Designated Partner of LLP.	Each director is required to have a Director Identification Number before being appointed as Director of any company.
DIGITAL SIGNATURE	There is no requirement of obtaining Digital Signature	As eforms are filled electronically, atleast one Designated Partner should have Digital Signatures.	As eforms are filled electronically, atleast one Director should have Digital Signatures
DISSOLUTION	By agreement, mutual consent, insolvency, certain contingencies, and by court order.	Voluntary or by order of National Company Law Tribunal.	Voluntary or by order of National Company Law Tribunal.
TRANSFERABILITY OF INTEREST	A partner can transfer his interest subject to the Partnership Agreement	A partner can transfer his interest subject to the LLP Agreement	A member can freely transfer his interest
ADMISSION AS PARTNER / MEMBER	A person can be admitted as a partner as per the partnership Agreement	A person can be admitted as a partner as per the LLP Agreement	A person can become member by buying shares of a company.
CESSATION AS PARTNER / MEMBER	A person can cease to be a partner as per the agreement	A person can cease to be a partner as per the LLP Agreement or in absence of the same by giving 30 days prior notice to the LLP.	A member / shareholder can cease to be a member by selling his shares.
REQUIREMENT OF MANAGERIAL PERSONNEL FOR DAY TO DAY ADMINISTRATION	No requirement of any managerial; personnel , partners themselves administer the business	Designated Partners are responsible for managing the day to day business and other statutory compliances.	Directors are appointed to manage the business and other statutory compliances on behalf of the members.
STATUTORY MEETINGS	There is no provision in regard to holding of any meeting	There is no provision in regard to holding of any meeting.	Board Meetings and General Meetings are required to conducted at appropriate time.
MAINTENANCE OF MINUTES	There is no concept of any minutes	A LLP by agreement may decide to record the proceedings of meetings of the Partners/Designated Partners	The proceedings of meeting of the board of directors / shareholders are required to be recorded in minutes.
VOTING RIGHTS	It depends upon the partnership Agreement	Voting rights shall be as decided as per the terms of LLP Agreement.	Voting rights are decided as per the number of shares held by the members.
REMUNERATION OF MANAGERIAL PERSONNEL FOR DAY TO DAY ADMINISTRATION	The firm can pay remuneration to its partners	Remuneration to partner will depend upon LLP Agreement.	Company can pay remuneration to its Directors subject to law.
CONTRACTS WITH PARTNERS/DIRECTOR	Partners are free to enter into any contract.	Partners are free to enter into any contract.	Restrictions on Board regarding some specified contracts, in which directors are interested.
MAINTENANCE OF STATUTORY RECORDS	Required to maintain books of accounts as Tax laws	Required to maintain books of accounts.	Required to maintain books of accounts, statutory registers, minutes etc.
ANNUAL FILING	No return is required to be filed with Registrar of Firms	Annual Statement of accounts and Solvency & Annual Return is required to be filed with Registrar of LLP every year.	Annual Financial Statement and Annual Return is required to be filed with the Registrar of Companies every year.
SHARE CERTIFICATE	The ownership of the partners in the firm is evidenced by Partnership Deed, if any.	The ownership of the partners in the firm is evidenced by LLP Agreement.	Share Certificates are proof of ownership of shares held by the members in the Company
AUDIT OF ACCOUNTS	Partnership firms are only required to have tax audit of their accounts as per the provisions of the Income Tax Act	All LLP except for those having turnover less than Rs.40 Lacs or Rs.25 Lacs contribution in any financial year are required to get their accounts audited annually as per the provisions of LLP Act 2008.	Companies are required to get their accounts audited annually as per the provisions of the Companies Act, 1956,
APPLICABILITY OF ACCOUNTING STANDARDS.	No Accounting Standards are applicable	The necessary rules in regard to the application of accounting standards are not yet issued.	Companies have to mandatorily comply with accounting standards
COMPROMISE / ARRANGEMENTS / MERGER / AMALGAMATION	Partnership cannot merge with other firm or enter into compromise or arrangement with creditors or partners	Companies can enter into Compromise / arrangements / merger / amalgamation	LLP’s can enter into Compromise / arrangements / merger / amalgamation
OPPRESSION AND MISMANAGEMENT	No remedy exist , in case of oppression of any partner or mismanagement of Partnership	Provisions providing for remedy against Oppression and mismanagement exists	No provision relating to redressal in case of oppression and mismanagement
CREDIT WORTHINESS OF ORGANIZATION	Creditworthiness of firm depends upon goodwill and creditworthiness of its partners	Due to Stringent Compliances & disclosures under various laws, Companies enjoys high degree of creditworthiness.	Will enjoy Comparatively higher creditworthiness from Partnership due to Stringent regulatory framework but lesser than a company.
WHISTLE BLOWING	No such provision is provided under Partnership Act, 1932	No such provision is provided under the Companies Act, 1956.	Provision has been made to provide protection to employees & partners, providing useful information during an investigation or convicting any partner or firm.