How to - Partnership under Companies Act

Partnership under Companies Act

Section 4 of the Companies Act, 1956, provides that the number of partners in a firm shall not exceed 20, and a partnership having more than 20 persons will be illegal.

When there is partnership between two firms all the partners of each firm will he taken into account for the purpose of this provision but if a partnership is between the Karta or any member of HUF on the one hand and another individual or Individuals on the other, the members of the joint family will not be taken into account. A Hindu Undivided family carrying on business as such, not being a partnership, S 11 of the Companies Act will not apply even if the members of that family are more than 20. But where two or more Hindu Undivided families are carrying on business in partnership the number of the members of those families except minors will be taken into account for the purpose of S. 11 of the Companies Act.