Difference between Company and Partnership Firm in Pakistan

difference between company and partnership firm in Pakistan

Difference between Pvt Ltd Company and Partnership Firm in Pakistan

It is legal requirement that every person who wishes to engage in business must register an entity for himself. There are different ways a business can be registered in Pakistan. Following are the common ways opted to establish business in Pakistan:

  1. Proprietorship business
  2. Partnership Firm
  3. Company

Proprietorship business is usually opted by small traders and shoppers by single owner. Purpose of this article is not only to discuss the difference between Partnership Firm and Company but also to touch some of the significant features of Partnership Firm and Company.

Partnership Firm

Partnership business can be registered under the Partnership Act, 1932 and business of partnership once registered is commonly known as Partnership Firm. 2 or more partners can opt to register a Partnership Firm. Limit of partners which can be introduced in the Partnership Firm are minimum 2 and maximum 100 partners. What is important to understand that relationship between partners is driven by the Agreement of Partnership and in case of dispute between partners, dispute in resolved by court by keeping in view the terms and conditions of the agreement of partnership signed between the parties.We charge Rs. 11,999/- for registration of Partnership Firm. Click on the link for the complete procedure for registration of Partnership Firm HOW TO REGISTER A PARTNER SHIP FIRM IN PAKISTAN?

Can a partner receive Salary under the Partnership Business?

Partner in Partnership Business cannot receive salary merely on basis of fact that he has invested certain amount of contribution in the partnership business. Investment contributed in partnership business in called capital investment. Partner is only required to receive profit out of business according to his percentage of partnership. Profit as may be generated by Partnership business can be distributed among partner after deduction of business expenses and losses if any incurred by Partnership business. Profit can be received by partners according to mutual resolve on monthly, annual or biannual basis. 

Whether liability of Partnership Firm is same as that of its Partners?

Partnership Firm is not a separate legal entity. Liability of Partners and Partnership Business are considered same. This means that in any case where Partnership Firm owes certain amount of money to a third party, Partners jointly and severally will be liable to satisfy the same. For Example: Court has decreed that Partnership Firm is required to pay PKR 100,000/- to PARTY B. PARTY B can recover the amount in satisfaction of court decree by selling assets of Partnership Business. if there are no sufficient assets of Partnership Firm, PARTY B can opt to recover the same from Partners of the Partnership Firm, jointly and severally by liquidating assets of Partner or Partners as the case may be. 

Whether Partnership Firm is mandatory required to be registered?

Partnership Business is mandatory required to be registered to protect the interest of partners. Section 69 of the Partnership Act, 1932 clearly provide that no claim or suit can be filed by any partner against the other, for resolution of dispute, where Partnership Business is not registered as desired by the law. 

Where is Partnership Firm Registered?

Partnership Firm is registered under the Partnership Act, 1932 with Registrar Firm of district in which office of the Firm is located.

If Partnership Firm is registered in one District, whether it can open its branches outside that district?

If Partnership Firm is registered with Registrar Firms Lahore District, as many branches in Lahore can be established by Partnership Firm. However, in case new branches are required to be established outside Lahore district, fresh Partnership Firm is required to be registered in such District.

How much time it takes to register a Partnership Firm?

Normal time its takes for registration of Partnership Business in 3-4 days max.


A company is referred to as artificial person and a legal entity formed by a group of persons to engage in and operate business. Company is of different types but the most common company which can be registered in Pakistan for doing business is Private Limited Company.We charge Rs. 11,999/– to register a company with local directors. Click on the link below for the complete procedure on registration of Private Limited Company in Pakistan HOW TO REGISTER A PRIVATE LIMITED COMPANY IN PAKISTAN ?

Company is registered under the Companies Act, 2017. In order to register a company generally minimum number of persons required are minimum 2 and maximum number of members can be 50 in a Company.  Members of Company who have subscribed its shares are called Directors. It is considered the most organized structure for doing business in Pakistan. More so, legal rights of each Director in Company are protected which are regulated by Security Exchange Commission of Pakistan (SECP). SECP not only supervise but also regulate affairs of each company.

Where to register a Company in Pakistan?

Company is registered with SECP under the Companies Act, 2017. Process of registration of company is available both Online and Offline. 

How much time it takes to register a company in Pakistan?

Normal time it takes to register a company in Pakistan in 1-2 days max.

Can a director take profit in Company?

Director in a company usually takes Salary for the work done in Company. Because of the fact that Company is an artificial legal person, it treats its Directors as employee. Salary of Director is fixed by Board of Directors of Company from time to time.

Who takes decision of behalf of the Company?

It is the Board of Directors of the Company who takes decision in relation to each affair of the Company through Company resolve. Each member is invited to cast a vote in its General or Special Meeting as the case may, and decision becomes Company Resolve after taking into consideration majority, basis on total number of shares held by each member.

What is liability of Directors in case of Company?

Liability of Directors in case of company are limited to amount of shares subscribed in a company. This means that personal assets of directors cannot used to attached or liquidated to satisfy liability of company towards third party. 

Key Difference Between Company And Partnership Firm In Pakistan:

Following are the key difference between company and Partnership Firm:

  • A company is referred to as separate legal entity registered under the Companeis Act, 2017 whereas Partnership Firm is legal entity which is no different from it partners. Partnership Firm is registered under the Partnership Act, 1932.
  • Members of company are called Directors whereas members in Partnership Firm are referred to as Partners.
  • Active members in company are called directors and members who have only purchases shares of company is some cases are called subscribers. Active member on the other hand in Partnership Firm are called Active Partners and non-active members are called Sleeping Partners.
  • Registered company is called Private Limited. Registered Partnership business is called Partnership Firm.
  • Company can be registered with 2-50 Directors. Firm can be registered with 2 -100 partners.
  • The liability of directors in case of company is limited to extent of shares of company purchased. Liability of Partners in case of Partnership Firm is unlimited.

Corporate Law Firm in Lahore , Hamza and Hamza Law Associates can assist in deciding the most beneficial, effective and reliable business structure that fits your line of business. Once you are clear on which business structure suits you best, we initiate the process upon your approval without you worrying about the tiring and hectic process of registration.

Your new business is just a call away. Contact us and get your business registered right away!

Call us : 0300 8447469

Email : info@hamzaandhamza.com