Can company become partner

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 May 2012 I want to know that Can limited liability company can enter into a partnership firm with a foreign national (Individual)?

Will it be so called partnership firm? And what various approvals are required in this case?

Ajay Mishra

Ajay Mishra (Expert)
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10 May 2012 Hi

Please read master circular on FDI issued by RBI. I think it can help you.

Regards

HIREN

HIREN (Expert)
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10 May 2012 As per my view, company cannot be partner in partnership firm on following grounds.

(1) company having limited liability therefore cannot enter into partnership firm.

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Charu Srivastava

Charu Srivastava (Expert)
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10 May 2012 Company can be become the partner in the partnership firm..the reason being company is an artificial person and competent to contract.

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Querist : Anonymous

Querist : Anonymous (Querist)

15 May 2012 But how can a limited liability Co. bears unlimited liablity under Indian Partnership Act??? THough Co. itself is registered as a Limited Liability under Companies Act?????

Charu Srivastava

Charu Srivastava (Expert)
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15 May 2012 The Company has a limited liability.
The partnership firm has unlimited liability i.e. in case dissolution partners assets shall be attached to pay off the liabilites.

Company is an artificial legal person,on being partner of a partnership firm, would render the company liable to pay off the debts i case of dissolution.

Hope i could clear my point.

Feel free to ask if any query..

thanks and Regards

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Mihir Doshi

Mihir Doshi (Expert)
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15 May 2012 Agree with expert.

Company can become partner and enter into contract with partnership

Mihir Doshi

Mihir Doshi (Expert)
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15 May 2012 Agree with expert.

Company can become partner and enter into contract with partnership

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Querist : Anonymous

Querist : Anonymous (Querist)

15 May 2012 As in my case, there is M/s XYZ Ltd. (Limited Liablity Co.) owns M/s ABC Incorporated.

M/s XYZ (Parent Co.) enters into partnership agreement with NRI-Individual on behalf of M/s ABC Inc. And we make consolidated financial results.

So is it possible???

And further the Co.'s earning belongs to the members of the Co., so how the Co. will bear the unlimited Liablity... The liablity of members is only upto the face value of the shares.?

Charu Srivastava

Charu Srivastava (Expert)
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15 May 2012 Dear,

Let me tell you the company's earning belong to the members to the extent they are entitled in the form of dividend and others.

The members entity is different from company.

If the firm dissolves, then companies assets can be utilized for paying debt because the partners(in this case parner is company) of the firm have unlimited liabilities.

But in case company is wound up then the members assets cannot be attached to pay off the liabilites by virtue of limited liability.