registration of firms under companies act

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yadushi (Querist)
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24 January 2009 Partnership Act 1932 says that registration of firms is not compulsory but to get the benefits of registration the firm can be registered with the registrar of firms.
Companies act 1956 says that if the in a firm no. of partners exceeds d maximum limit which is 10 for Banking co. n 20 for other firms then d said firm has to get itself registered under the companies act with the ROC otherwise it will b classified as an illegal association (Sec. 11).
Can it b concluded that a partnership firm can be registered under partnership act if no. of partners fall within d max. limit.
Kindly help.

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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24 January 2009 Yes. A firm can not be registered with more than 10 for banking related firm and 20 for other firms.

However there is other opition if there are more than 20 memebers.

Create two firms with equal number of members. Create third firm with two partnership firms as a partner.

Beacasue in a firm, an individual or company or firm can be a partner.

yadushi

yadushi (Querist)
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25 January 2009 Thankz sir

yadushi

yadushi (Querist)
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25 January 2009 Dear sir
Thankz for resolving d query.
Sir, wht diff. it makes for ny firm to get itself registered either under Partnership act or under companies act?
nd how will we differentiate between d two firms. nd sir most firms use Co. aftr their name, is this so because they are registered under Companies act and d one registered under Partnership Act uses d word (Registered).

Aashok Kumar Sharma online

Aashok Kumar Sharma online

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20 July 2025 Great question! Here’s a clear explanation to differentiate registration under the Partnership Act vs registration under the Companies Act, and the implications:

1. Partnership Firm Registration under Partnership Act, 1932
Applicability: For firms with up to 10 partners (Banking firms) or 20 partners (other businesses).
Registration: Optional but advisable for legal benefits.
Nature: Not a separate legal entity—partners are personally liable.
Name Usage: Firms usually use their own name or add “Registered Partnership Firm” or just no suffix.
Advantages of Registration:
Legal proof of the firm’s existence.
Can file suit against third parties.
Disadvantages:
Unlimited personal liability of partners.
Limited number of partners.
Difficult to raise capital.
2. Registration under Companies Act, 2013 (Earlier Companies Act, 1956)
Applicability: When partners exceed limits under Partnership Act or want limited liability.
Nature: Separate legal entity distinct from its members.
Liability: Limited liability for shareholders.
Name Usage: Must use suffix “Private Limited” or “Limited”.
Types:
Private Limited Company: Max 200 members, restrictions on share transfers.
Public Limited Company: No max limit on members, can raise funds publicly.
Advantages:
Limited liability protection.
Easier to raise funds.
Perpetual existence.
Disadvantages:
More regulatory compliance.
Costly to incorporate and maintain.

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