Duties of Partner and Joint Stock Companies

Duties of Partners

Partners have to maintain accounts which describe the true picture of the business.

Partners should use their powers within limits specified in the partnership deed.

Partners are responsible to provide accurate information to Government bodies.

Partners are responsible to pay their share in case of loss to the business.

It is duty of every partner to obey the decision that has been made in the

partnership.

Partners should not disclose any secret information about the business to any other

person.

It is a moral obligation and legal responsibility of the partners not to use firm’s

forum to take any advantage without intimating to other partners.

Joint Stock Companies

Joint Stock Companies are formed under the Companies Ordinance 1984.

Joint Stock Company is an association of persons for making profit.

Advantages of Joint Stock Companies

We can expand the business

Credit facility

More capital

With more capital and more expertise, companies have more chances to earn more

profit.

Expansion in the scale of business

Responsibility of investor is limited to the face value of shares. This is called

Limited Liability.

If one person dies or leaves the country, it does not have any impact on the

business.

Life of the joint stock company is longer than sole proprietorship and partnership.

It is easy to transfer rights.

Company can hire better experts which results in better management.

Public place more confidence in companies rather than in any other form of

business.

Anyone can exit from joint stock company by selling his/her shares.

Disadvantages of Joint Stock Companies

Formation of Joint Stock Company is very lengthy, very complicated and very

technical job.

Lack of interest.

There is not much secrecy found in companies.

Companies pay double taxation to the Government.

Delayed decision making

Power is centralized because there are few people who hold major portion of

company’s shares.

Public Limited Company Vs Private Limited Company

Number of members

For a public limited company, minimum numbers of members are seven.

For a private limited company, minimum numbers of members are two.

Issue of shares

Public limited company is bound to promote issue of shares to general public

through media.

There is no such provision for private limited company.

Name of the company

Public limited companies add the word “Ltd.” with their name.

Private limited companies add the word “(Pvt) Ltd.” with their name.

Annual report

Public limited companies have to present their data to general public.

There is no such provision for private limited company.

Transfer of shares

It is easy to transfer shares in public limited companies.

In private limited company, shareholder cannot transfer the shares without the

consent of other members.

Statutory meeting

It is obligatory for the public limited company to hold statutory meeting.

There is no such obligation for privet limited company

Submission of annual report

It is obligatory for the public limited companies to submit their annual report to

registrar Corporate Law Authority.

It is not necessary for private limited company.

Taxation

Public limited company pays double taxation at different income tax rates.

Private limited company pays tax only once at different income tax rates.