Answer to Question #248801 in Economics for Neha

Question

A partnership firm doesn’t have the legal existence as a separate legal entity. Explain the statement with a comparative analysis with LLP firms.

Answer 1

The choice of the organizational and legal form of a legal entity depends primarily on the purpose of its creation. If this is profit-making, then one of the forms of commercial organizations is used. If there is no such goal (or it is not the main one), a non-profit organization is registered (which can also generate income, but only to achieve its main goals and in accordance with them).

The most common forms of commercial organizations are a limited liability company (LLC) and a joint-stock company (JSC). They differ in the peculiarities of their creation, the nature of corporate rights, the procedure for the disposal of shares/shares, requirements for information disclosure, etc.

JSC - this is a more complex legal form in administration in comparison with LLC. A maximum of formalities and procedures is provided for public joint-stock companies (PJSC), a comparative minimum for LLC. Non-public JSCs occupy a middle position: being full-fledged joint-stock companies, they are entitled to use some of the options typical of LLCs. Hence, registration of an LLC is usually recommended for small or medium-sized companies and JSCs for medium-sized or large ones.