Partnership firm as a partner

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Girish Andipara (Querist)
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28 September 2013 Is Partnership firm is allowed to be a partner in another firm / company ?

If yes, pl share a clause of partnership act on this.

Ajay Mishra

Ajay Mishra (Expert)
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28 September 2013 Hi

Section 41(2) provides that only a person can be a member of a company who has agreed in writing to become a member and whose name is entered in the Register of members.
As per Department's Circular No. 4/72, dated 9-2-1972, it has been clarified that "a firm" not being a person, cannot be registered as a member of a company.

However, section 25(4) of the Act, provides that when the company is licenced under section 25, a firm may become a member of any association or such company licensed under section 25. In such case the membership of the association or company shall cease upon the dissolution of the firm. However, partners of the dissolved firm may continue to be members of the association or company in their individual capacities.

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