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of differentiation and division of functions in control and management, which
partnership allows.
5. The liability of partners being generally unlimited, a firm can borrow more capital
than a sole trader.
6. Any material decision made by the firm requires the consent of all the partners.
As such minority gets adequate expression.
Disadvantages of partnership
1. A firm cannot always take a prompt and quick action because consultations
of all the partners is essential. Too many cooks spoil the business broth and
divided council may act with indecision, though ordinarily in most questions of
management a majority decides.
2. The number of partners is limited; consequently, the amount of capital is also
limited. It is, of course, certainly, greater than that of a sole trader but it is definitely
less than that of a company whose shareholders can be thousands.
3. The liability of a partner is unlimited which is a great drawback to him. The larger
the sale of operations of a firm, the greater is the risk.
4. Partnership has a very precarious existence. The death, lunacy or insolvency of a
partner or an act in contravention to the partnership agreement may lead to the
break-up of the firm
5. A partner cannot sell his share in the partnership without the consent of the
other partners. Even if the partners are inclined to consent, the transferee must
be either one of the remaining partners or a person entirely agreeable to them,
which considerably restricts the scope of sale.
A Joint Stock Company

A joint stock company may be defined as an association of several persons, incorporated
as a company, who contribute money to a joint or common stock for the purpose of
employing it in some business and share among themselves the profit or the loss
arising from it. A joint stock company must be an incorporated body. Joint Stock
Company is the voluntary association of persons, having separate legal existence,
common seal with a large amount of capital and with a motive to make profit. The
capital of Joint Stock Company is divided into large number of units called shares and
is issued to general public. The group of people who hold its share is the shareholder
of the company and they have liability only up to their investment. These shares can
be easily transferred from one person to another. It is managed and controlled by the
representatives of shareholders who are known as Board of Directors.

According to L.H. Haney, "A company is an artificial person created by law
having a separate entity with a perpetual succession and a common seal."

According to Nepal Company Act 2063 B.S., "Companies formed and
registered under this Act" or an "existing company".

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