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Atul (Querist)

31 May 2009 Hi,
How a partnership venture and Pvt Ltd company (with multiple directors) differ in company law/act. Need to setup one to do india+foeign business, kindly guide. What will be the timeline and expenses to setup one firm.
Thanks,
atul

CS. Ashish Shah

CS. Ashish Shah (Expert)

02 June 2009 Dear Atul,

As per the Companies Act, the difference between a Partnership Firm and a Company is as under:

1. A Partnership firm need not requires the registration under the Companies Act, while a Private Limited Company is required to be registered.

2. A Partnership Firm can be set up without any minimum capital while in Private Limited Company a minimum paid-up capital should be Rs.1 Lacs and subscribed by minimum 2 persons.

3. A Partnership Firm the liabilities of Partners are unlimited while in a Company it is limited to the paid-up capital of the Company.

4. A Partnership Firm can not sue or sued in its name while a Company can sue or sued in its own name in the Court.

5. There is no as such legal entity in case of a Partnership Firm while the company has its own entity apart from its members and directors

6. A Private Limited Company can be converted into a Public Limited Company can float a Public Issue in Future while it is not possible for a Partnership Firm.

However, a Company needs to comply with the requirement of RBI when it deals with Foreign Currency.

I think this will give you an idea for the formation of a firm or company for now.

If you have any further query, pl. feel free to contact.

Regards,

Ashish Shah

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