Distinction between company and other forms of organization (India)

In India, businesses mainly operate as sole proprietorships, partnerships and companies. Each of these business structures has its own advantages and shortcomings and is subject to different regulatory and tax regimes. The sole proprietorships have restrictions in the form of limited capital and other resources along with unlimited liability of the sole proprietor. The partnership form of business fails to recognize the difference between partnership and partners. It also restricts the maximum number of partners to ten, in case of banking business and twenty in case of other business and it imposes unlimited liability on each partner for acts committed by another and by partnership as a whole. The Limited Liability Partnership (LLP) form of business is an alternative to corporate form of business as it provides the benefits of limited liability of a company but allows its partners the flexibility of organizing their internal management on the basis of a mutually arrived agreement, as is the case in a partnership firm. This format would be useful for small and medium enterprises, in general, and for the enterprises in services sector, in particular.

The private company form of business, by its articles of association, limits the number of its members to fifty (excluding the past and present employees of the company), restricts the right of its members to transfer its shares and prohibits an invitation to the public to subscribe to any shares in or the debentures of the company. Some of the differences of LLP with the traditional partnership and private limited company are given below:

POINT OF COMPARISON	LIMITED LIABILITY PARTNERSHIP	PARTNERSHIP	PRIVATE LIMITED COMPANY
Governance	The Limited Liability Partnership Act, 2008	The Indian Partnership Act, 1932	The Companies Act, 1956
Registration	Mandatory	Optional	Mandatory
Number of Members	Minimum: At least 2 partners Maximum: No Restriction	Minimum: At least 2 partners Maximum: 10 in case of banking business and 20 in case of other business	Minimum: At least 2 members Maximum: 50, excluding members who are or were in the employment of the company.
Body Corporate & Separate Legal Entity	It is a body corporate having a separate legal entity capable of suing and being sued in its own name	It is not a body corporate and does not have a separate legal entity.	It is a body corporate having a separate legal entity capable of suing and being sued in its own name
Name	Name to end with LLP	The firm, registered, shall use word (Registered) immediately after its name	Name to end with private limited
Liability of Partners	Liability of a Partner is limited to the extent of his capital as per the LLP Agreement, except in case of unauthorized acts, fraud and negligence of partner(s) when the delinquent partner will be personally liable.	Every Partner is liable jointly (with all the other partners) and severally for all acts of the firm done while he is a partner	Liability of the shareholder is limited to the extent of total amount due on shares subscribed
Minimum number of directors/ Designated Partners	Designated Partners: At least 2 and have DPIN	There is no concept of Designated Partners	Directors: At least 2 and have DIN
Management	By Partners/Designated Partners	By Partners	By Board of Directors
Incorporation Document	‘Incorporation Document’ is executed. LLP agreement governs the mutual rights and duties of partners of LLP.	Partnership deed	Memorandum & Articles of Association to be filed with Registrar of Companies. Table A applies in the absence of Articles.
Winding Up	The winding up of the LLP may be either voluntary or by the Tribunal to be established under the Companies Act, 1956. Till the Tribunal is established, the power in this regard has been given to the High Court.	A partnership firm can be wound up at any time by agreement	Company is created by law and can be wound up only through law