1. Legal Personality:

• Partnership Firm:

• Not a separate legal entity.
• Extension of the partners.
• Governed by the Partnership Act, 1932.
• Partners individually responsible for debts.

• Company:

• Separate legal entity.
• Can sue and be sued.
• Governed by the Companies Act, 2017.
• Shareholders’ liability limited to share capital.

2. Formation and Registration:

• Partnership Firm:

• Created by oral or written agreement.
• Advisable to register with the Registrar of Firms.
• Registration not mandatory but recommended.

• Company:

• Must be formed and registered with SECP.
• Requires filing documents (Memorandum, Articles).
• Formal registration is mandatory.

3. Liability of Partners/Members:

• Partnership Firm:

• Partners have unlimited liability.
• Personally responsible for debts.
• Joint and several liability.

• Company:

• Members’ liability limited.
• Limited to unpaid value of shares.
• Not personally liable beyond share capital.

4. Management and Decision Making:

• Partnership Firm:

• All partners have equal say.
• Partners bind the firm.
• Decisions made collectively.

• Company:
  • Management by appointed directors.
  • Shareholders decide through voting.
  • Day-to-day management by directors.

The distinction between a partnership firm and a company in Pakistan is substantial and involves legal, structural, and liability-related differences. While partnership firms offer simplicity and flexibility, companies provide a separate legal identity, limited liability, and a structured management framework. Understanding these distinctions is crucial for businesses choosing the appropriate form based on their needs and objectives. It is recommended to seek legal advice from Global Law Company for accurate and up-to-date information tailored to specific circumstances.

Feel free to reach out to Global Law Company for further assistance or to schedule a consultation.