I am a commerce student in India and currently studying about different business organizations. I am confused about the difference between Joint stock companies and Partnership firms. Can someone help explain the key differences?
Joint stock companies have a separate legal existence, while partnerships do not. This means that the owners of a joint stock company are not personally liable for the company’s debts and obligations. In a partnership, the partners are personally liable for debts and obligations.
Joint stock companies can raise capital through the sale of shares to the public, while partnerships typically have a limited number of partners who invest capital. This makes it easier for joint stock companies to access large amounts of funding.
The management structure is different. Joint stock companies have a board of directors who appoint managers, while partnerships are managed directly by the partners themselves.
Joint stock companies tend to exist for a longer period of time as the owners can transfer their shares freely. Partnerships usually end when a partner leaves or retires.
Profits and losses are distributed differently. In joint stock companies, profits are distributed as dividends to shareholders. In partnerships, profits and losses are shared among the partners according to their agreed profit-sharing ratios.
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