Understanding the distinctions between CV (Commanditaire Vennootschap) and firm is crucial for aspiring entrepreneurs. Both are forms of partnership entities, yet several aspects set them apart. Continue reading to discover the disparities between CV and firm.
Also read: What is a Firm: Definition, Types, and How to Establish One
Definition of CV and Firm
CV (Commanditaire Vennootschap): CV, or Limited Partnership, is a business entity established through a partnership of two or more individuals. In a CV, some are obligated only to invest capital (passive partners), while others are responsible for carrying out business activities using the invested capital (active partners).
Firm: Firm is a business entity formed by a partnership of two or more individuals where all parties are involved in conducting business activities on behalf of the firm. Decisions made by all parties must be in the name of the firm.
Differences Between CV and Firm
Business Naming
- CV: Naming a CV does not follow specific regulations. All partners involved in establishing the company are free to choose a name as desired, provided it is suitable for a CV.
- Firm: Naming a firm is more regulated. A firm is established under a joint name, and the chosen name must symbolize that the firm is formed under a common name.
Naming rules for both CV and firm include being in Latin letters, not being used by another business entity, not conflicting with morality and public order, not being the same as official state or foreign institution names, and not consisting of a series of non-meaningful letters or numbers.
Business Management
- CV: CV has two types of partners, active and passive. Active partners are responsible for managing business activities, while passive partners are only responsible for the capital invested.
- Firm: A firm only has active partners. Each partner is responsible for managing the firm. However, exceptions can be made if the Articles of Association of the firm specify that certain parties do not have authority in business management.
Business Liability
CV: In a CV, the two types of partners have different responsibilities. Passive partners are only liable for the invested capital and have no rights or obligations to deal with third parties. Active partners bear full responsibility for dealings with third parties.
Firm: All partners in a firm are active, and each partner is jointly responsible for the company’s obligations and agreements. For example, if one partner enters into a debt agreement using the firm’s name, all partners are collectively responsible for that debt.Business Scope
- CV: CV businesses often have a diverse range of activities, typically in the industrial and commercial sectors. These may include selling food, clothing, transportation services, design services, printing services, etc.
- Firm: Firms usually lean towards professional or consultancy services. Examples include law firms, legal firms, accounting firms, architectural firms, and the like.
Also read: Differences Between Individual PT and CV
In conclusion, these are the key differences between CV and firm. For those planning to establish a CV or firm and facing office facility issues, a virtual office from vOffice could be an ideal solution, facilitating more effective and efficient business operations.
vOffice is available in major cities such as Jakarta, Tangerang, Bekasi, Bandung, Surabaya, Medan, and Bali. If you’re interested in establishing a CV or firm virtually, vOffice can assist you in business establishment.
