Distinction Between Partnership and Corporation

JAYDEE P. VILLAMAR

DISTINCTIONS BETWEEN PARTNERSHIP AND CORPORATION PARTNERSHIP

CORPORATION

Partnership becomes established through the simple expediency of an agreement among the members thereof.

A private corporation is created by operation of law

Juridical personality obtained by the partnership from the moment the agreement among the partners has been reached and the papers for registration filed with the Security and Exchange Commission (SEC)

Private corporation acquires legal personality from the date the certification is issued by the SEC

- a partnership may be stipulated in the articles of agreement by the partners.

-shall not be in excess of fifty years, although such term may be extended prior to its expiration for a like period.

it cannot be said to be true of a partnership.

- the right of succession is enjoyed by a private corporation

Powers

A partnership can engage in any field of business as the partners may decide provided it is not contrary to law, morals, or public policy.

The operation of a private corporation is limited to what is specifically stipulated in its existence. Hence, if a private corporation is to operate in a particular line of economic activity or business other then what the law authorizes, it must first obtain an amendment to its charter from competent authority.

Delectus Personae

the principle of delectus personae prevails. No new members may be admitted into the partnership without the unanimous consent of all partners.

It may admit new stockholders into the corporation without the need of obtaining the prior consent or approval of the other stockholder.

Management

Partnership may operate even without a designated manager. In such case, all the general partners of the partnership shall be deemed to act for the partnership.

Private corporation is run by a board of directors. It exercises its powers through the board

Liability to third parties

With the exception of limited partners, the members of a partnership are liable jointly (as a group) and severally, meaning individually, for all the liabilities of the business.

One main advantage of private corporation over partnerships is that the stockholders are not liable for over and above what they have subscribed fro shares of stocks.

According to the manner of Creation

With respect to Juridical Personality

Term of Existence Right of succession

Dissolution

It may be dissolved almost immediately, subject to the expressed will of the partners.

If it is agreed by the stockholders to dissolve the corporation for whatever reason or reasons, such intention shall require the prior consent of the proper government authority. - general corporation may be dissolved at any time by legislative enactment, as when its charter or franchise is cancelled by the government.

2. How can a Corporation be created? - a corporation can be created by operation of law. Corporation being a creature of law, “owns its life to the state, its birth being purely dependent on its will,” it is “a creaqture without any existence until it has received the imprimatur of the state acting according to law.” 3. What do you mean by piercing the veil of corporate identity or person? - The corporation has a personality distinct from its stockholders, and is not affected by the personal rights, obligations and transactions of the latter. The veil of corporate fiction may be pierced when it is used as a shield to further an end subversive of justice, or for purposes that could not have been intended by law that created it or to defeat public convenience, justify wrong, protect fraud or defend crime or to perpetuate fraud or confuse legitimate issues or to circumvent the law or perpetuate deception or as an alter ego, adjunct or business conduit for the sole benefit of the stockholder.