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ACCA Applied Skills · Corporate and Business Law (Global) · Partnerships

Which of the following is a key difference between a general partnership and a company with separate legal personality?

In a general partnership, partners usually have unlimited personal liability for the firm's debts, while shareholders of a limited company are liable only for any unpaid amount on their shares. This reflects the company's separate legal personality.

  1. AA partnership can always own property but a company cannot
  2. BIn a general partnership, partners usually have unlimited personal liability for firm debts, whereas shareholders of a limited company are generally liable only up to the unpaid amount on their sharesCorrect
  3. CA partnership must be registered but a company need not be
  4. DA partnership has perpetual succession but a company ends when a member dies

Explanation

Unlimited personal liability is the classic distinction: partners are personally liable for firm debts, while shareholders' liability is limited to unpaid share capital. The other options reverse the usual features, as companies have perpetual succession and must be registered.

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