15 March 2024
What happens if a partner dies in a partnership firm, which is a member of the private limited company and that the partnership firm is reconstituted with new members do we have to issue a fresh certificate stating the new partners or just that replace the name of the deceased partner with the new partner. please advise urgently.
11 July 2024
When a partner dies in a partnership firm that is a member of a private limited company, and the partnership firm is reconstituted with new partners, here's what typically happens regarding the shares held by the partnership in the private limited company:
1. **Transfer of Shares**: Upon the death of a partner, the partnership firm may undergo reconstitution where new partners are admitted. The deceased partner's share in the partnership firm will be transferred to the legal heirs or as per the terms of the partnership deed.
2. **Changes in Membership**: If the partnership firm continues as a member of the private limited company, the names of the new partners should be updated in the records of the private limited company. This involves notifying the company about the changes in the partnership composition.
3. **Issuance of Fresh Share Certificate**: Typically, the private limited company will require a resolution or an updated list of partners from the partnership firm reflecting the new composition. Based on this, the company will update its records and issue a new share certificate to the partnership firm with the names of the new partners.
4. **Legal Documentation**: Ensure that all legal documentation, including resolutions passed by the partnership firm and the private limited company, are in place to reflect the changes accurately. This includes updating partnership agreements and notifying regulatory authorities, if required.
5. **Compliance**: It's important to comply with the provisions of the Companies Act, 2013, and any specific requirements of the private limited company regarding the changes in membership of its shareholders.
Therefore, in summary, when a partner dies in a partnership firm that is a member of a private limited company and the partnership firm is reconstituted with new members, you should:
- Update the partnership firm's records to reflect the new partners. - Notify the private limited company about the changes in partnership composition. - Obtain a revised share certificate from the private limited company with the names of the new partners representing the partnership firm.
Consulting with a company secretary or legal advisor is advisable to ensure all steps are carried out correctly and in compliance with legal requirements.
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