Bangladesh University of Professionals

Mirpur Cantonment, Dhaka

Faculty of Business Studies

Department of Business Administration in Management Studies
Course Name: Legal Environment of Business
Course Code: ALD-2202
Submitted by
ROLL NUMBER NAME

19241095 Sinhaj Noor

Session: 2018-19
Bangladesh University of Professionals.
Assignment-4

Submitted to
Farzana Tazin
Lecturer,
Bangladesh University of Professionals.
Date of Submission: 28th September, 2020
 1. Difference between Partnership and Co-Ownership
Partnership and Co-ownership are two different segments in a business which should not be
misunderstood.
Meaning of Partnership and Co-ownership
The mere fact that two or more persons jointly employ their property in a business and share its
income does not mean that there is partnership between them. They are called co-owners. For
instance, sons who inherit some property from their father, are not partners even though the
property was to be managed jointly and its income were to be shared. Such type of relationship is
regarded as co-ownership.
A partnership comes into existence only when there is an agreement between the persons to carry
on some lawful business and share the profits arising from there.
Example: If the sons of a father enter into an agreement to run a cafe in the building, inherited
from their father and share the income thereof, they will be regarded as partners immediately on
starting the cafe.
Difference between Partnership and Co-ownership
Difference between partnership & co-ownership can be summed up in the following six points.
1. Agreement: Co-ownership is not necessarily the result of an agreement, but a partnership is
bound by the terms of agreement between partners.
2. Sharing of Profit and Loss: Terms of Co-ownership may not be based on profit and loss, but
partnership is based on profit and loss of the business, as the former does not necessarily involve
carrying on of a business, whereas a partnership does.
3. Transfer of Interest: A co-owner can transfer his interest to a total stranger without the
knowledge of the other co-owners. But in a partnership, a partner cannot transfer such an interest
on his own without the knowledge and consent of all other partners.
4. Lien on Property: A co-owner has no lien on the property co-owned, neither for expenses nor
for what may be due from the others as their share of a common debt, but a partner has.
5. Maximum number of Partners & Owners: In co-ownership there is no pre-defined limit for
maximum number of co-owners. But if a firm is engaged in financial services, the maximum
number of partners should not exceed 10. If the firm is engaged in other businesses, the maximum
number of partners shall be up to 20.
6. Claim of partition of property: Under the terms of co-ownership, a co-owner can claim
partition of property owned by another co-owner. Whereas in a partnership, a partner cannot
exercise such a right. He can sue the other partners for his share in the property of the firm only in
the event of the dissolution of firm
 2. Difference Between Partnership & Company
A partnership can be defined as a business operation that is legal, between two or more
individuals, all of whom share the management of the business along with the profits of the
business too.
A Company is a legal entity that is composed of a team of people, known as members, wherein
the liability of the members or shareholders is limited to their shareholding in the Company.
Difference Between Partnership & Company
Business Entity
A partnership is usually the relationship between any two or more individuals who come together
to run a business and share the profits and responsibilities and the coming together of the partners
forms a firm. A company, on the other hand, is a voluntary association of people which is a
registered body and is formed for the purpose of a common object.
Governing Act
A partnership is governed by the Indian Partnership Act of 1932 while a Company is governed by
the Companies Act, the revised version of which was in 2013. The registration of a partnership
under the Act is not mandatory and can be based on a partnership deed which is easy to form. A
company, however, needs to register itself mandatorily under the Companies Act with the
Registrar of Companies.
Management
In a partnership, the management of the firm lies in the hands of all the partners, while in a
company all the shareholders of the company select representatives, called as directors, who
manage the company and carry out the day to day affairs of the company.
Legal Position
A partnership does not have a legal identity that is separate from its members while a company is
a corporate body which has its own separate identity from that of its members.
Liability
In a partnership, the members have unlimited liability. In fact, the partners are jointly and severally
liable for all the debts of the partnership firm. In a company, the shareholders have limited liability
and are not liable for the acts of the company. The liability of the shareholders will be up to the
amount guaranteed by them.
Contract
A partner within a firm cannot enter into a contract with the same firm while a member of a
company can enter into a contract with the same company.
Number Of Members
In a partnership, the minimum number of members needed is 2 and the maximum limit is 10
members for banking, and 20 members for non-banking businesses. In a company, the maximum
number of members allowed is 200 members.
Decision Making
In a partnership firm, quick decisions are possible, while in case of companies, taking decisions
on important issues requires a fairly long time.
Capital Formation
A partnership does not let a person with limited resources be part of the capital formation of the
firm, and thus not a part of the partnership either. In a company, however, even people with limited
resources can become the shareholders of a big company.
Succession
In a partnership, after the death of a partner, the remaining partners and legal Heir of Deceased
partner succeed the partnership, with the consent of other partners. In a company the succession is
perpetual.
Dissolution
In a partnership, the firm can be dissolved with the consent of the partners while in a company
legal procedure are required for winding up the company or for going ahead with liquidation as
the case may be.
Transfer of Shares
Shares of a company are freely transferable unless restricted by the Articles. But a partner cannot
transfer his share without the consent of all other partners.
Filing of financials with regulatory authorities
The act of filing of financials with the regulatory authorities is not applicable for a partnership,
while in a company financial statements are to be filed annually with the Registrar of Companies.