Formation of Proprietary Firm
This query is : Resolved
01 October 2008
can a private limited company form proprietary firm?
01 October 2008
A company, just as a legal person is already a proprietor of the business it is running.
01 October 2008
But it is coming under the purview of Company. Can a company form a proprietorship firm or can it became proprietor of firm? please explain
01 October 2008
Mr.Srinivasaraghavan had explained in simple & easy to understand terms.
The thought that may be lingering in your mind may be…. A company is also like a person and so why it cannot form a proprietory concern.
Let me try to explain..
Incorporated companies are recognized as separate legal entities by law. These are formed by association of two or more human beings with certain objectives. That is why law requires the people who promotes them to prepare and verify memorandum of association & articles of association.
When a business is done by a single human being, we call it as sole proprietorship concern. Thus there is a business & ownership.
If the ownership is by two or more persons with joint and several liability then we call it as a partnership firm.
Law also allows ownership by two or more persons with limited liability, which we call as limited companies.
From the above it can be seen that there different form of owners to business.
Your query is something similar to “whether we can call one type of owner as the other type..?” which cannot be.
If a limited company wants to do business other than those in the main objective, it can amend the objective clause or form a subsidiary or enter into a joint venture.
Hope this throws some light
cheers
The thought that may be lingering in your mind may be…. A company is also like a person and so why it cannot form a proprietory concern.
Let me try to explain..
Incorporated companies are recognized as separate legal entities by law. These are formed by association of two or more human beings with certain objectives. That is why law requires the people who promotes them to prepare and verify memorandum of association & articles of association.
When a business is done by a single human being, we call it as sole proprietorship concern. Thus there is a business & ownership.
If the ownership is by two or more persons with joint and several liability then we call it as a partnership firm.
Law also allows ownership by two or more persons with limited liability, which we call as limited companies.
From the above it can be seen that there different form of owners to business.
Your query is something similar to “whether we can call one type of owner as the other type..?” which cannot be.
If a limited company wants to do business other than those in the main objective, it can amend the objective clause or form a subsidiary or enter into a joint venture.
Hope this throws some light
cheers
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