The primary difference lies in ownership, management, and legal structure: A PLC (Public Limited Company) is owned by shareholders but run by directors, whereas a partnership is owned and managed by the partners themselves.
Here's a breakdown:
Key Differences Between PLC and Partnership
| Feature | PLC (Public Limited Company) | Partnership |
|---|---|---|
| Ownership | Owned by shareholders | Owned by partners |
| Management | Run by directors | Run by partners |
| Liability | Limited liability for shareholders (usually) | Generally, unlimited liability for partners |
| Legal Structure | Separate legal entity from its owners | Not a separate legal entity from its owners |
| Setup | More complex and regulated setup | Relatively simple to set up |
Ownership and Management
-
PLC: Shareholders own the company but appoint directors to manage its operations. This separation of ownership and management is a defining characteristic.
- Example: Shareholders invest capital in the company but do not directly manage day-to-day activities.
-
Partnership: The partners both own and run the business. There is no separation between ownership and management.
- Example: Each partner contributes capital, skills, and time to the business and participates in its management. The reference states that a general partnership is relatively simple to set up. It requires multiple owners to jointly own and run the business.
Liability
- PLC: Shareholders typically have limited liability, meaning their personal assets are protected from business debts.
- Partnership: Partners usually have unlimited liability, making them personally responsible for the business debts and obligations.
Legal Structure
- PLC: It's a separate legal entity, distinct from its owners. This means the company can enter into contracts, sue, and be sued in its own name.
- Partnership: It is not a separate legal entity. The partners are directly liable for the business's actions.
In summary, a PLC offers limited liability and a separation of ownership and management but has a more complex structure. A partnership is simpler to establish but involves unlimited liability and direct partner involvement in management.
