FBE2604
ASSIGNMENT 1 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 2025
, Forms of Business Enterprise
1.1 Differences between a Partnership and a Company
A partnership is an agreement between two or more persons to carry on a business
together, sharing profits and losses. It is not a separate legal person from its partners.
Each partner is personally liable for the debts of the partnership, and decision-making is
generally based on the partnership agreement or mutual consent. Partnerships are
relatively easy and inexpensive to form, but they have limited continuity—ending if a
partner dies, withdraws, or the agreement is terminated.
A company, on the other hand, is a separate legal entity from its owners (shareholders).
It has perpetual succession, meaning it continues to exist regardless of changes in
ownership. Shareholders have limited liability, meaning they are only liable for the
company’s debts up to the value of their shares. Companies are governed by company
law (e.g., the Companies Act) and have stricter formation, reporting, and compliance
requirements, but offer greater protection and continuity.
Summary Table:
Aspect Partnership Company
Legal status Not a separate legal entity Separate legal entity
Liability Unlimited personal liability Limited liability
Continuity Ends on partner change/exit Perpetual succession
Formation Simple, based on agreement Formal registration required
Memorandum of Incorporation, company
Governance Partnership agreement
law
Shared directly between
Profits Distributed as dividends to shareholders
partners
ASSIGNMENT 1 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 2025
, Forms of Business Enterprise
1.1 Differences between a Partnership and a Company
A partnership is an agreement between two or more persons to carry on a business
together, sharing profits and losses. It is not a separate legal person from its partners.
Each partner is personally liable for the debts of the partnership, and decision-making is
generally based on the partnership agreement or mutual consent. Partnerships are
relatively easy and inexpensive to form, but they have limited continuity—ending if a
partner dies, withdraws, or the agreement is terminated.
A company, on the other hand, is a separate legal entity from its owners (shareholders).
It has perpetual succession, meaning it continues to exist regardless of changes in
ownership. Shareholders have limited liability, meaning they are only liable for the
company’s debts up to the value of their shares. Companies are governed by company
law (e.g., the Companies Act) and have stricter formation, reporting, and compliance
requirements, but offer greater protection and continuity.
Summary Table:
Aspect Partnership Company
Legal status Not a separate legal entity Separate legal entity
Liability Unlimited personal liability Limited liability
Continuity Ends on partner change/exit Perpetual succession
Formation Simple, based on agreement Formal registration required
Memorandum of Incorporation, company
Governance Partnership agreement
law
Shared directly between
Profits Distributed as dividends to shareholders
partners
