Can a partnership firm be a shareholder ?

taran (UNbeatable)     16 February 2012

A partnership firm can be a member but not a director in the company. Only individual can be director in a company. Partnership firm can become shareholder of a company. Shares will be held in the name of partnership firm.

Smriti Dhawan (Company Secretary )     16 February 2012

Section 41 of the companies act 1956, defines a member as a person who has signed the memorandum of association and every other person who agrees in writing to become a member and whose name is entered in the register of members.

A partnership firm, being not a person in the eyes of law, cannot be a member of a company. However, a firm can purchase shares of a company in the individual names of its partners as joint shareholder.

Ajay Mishra (Company Secretary)     16 February 2012

Hi

A partnership firm is not a legal person and as such it can not, in its own name, become the member of the company. However, its partners may become joint shareholders of the company and their name be entered in the register of members. However, it can become member of section 25 company.

Regards

Ajay Mishra

Aravind.. (CA)     16 February 2012

A partnership firm can hold shares in a company as an investment. But shares can be only in the name of partners.

Ajay Mishra (Company Secretary)     17 February 2012

Hi

No Arvind, a parnership firm can not invest in company, however partners can do so.

Regards

Shridhi Jain (Company Secretary)     17 February 2012

Thanks dear members for your replies.

Pls tell me is there any legal compliance to be complied with in this regard? Sec. 187C is to be complied, wat do u think? any other compliances?

Actually shares have already been transferred in the name of the firm and money is also transferred by the firm to the respective company. Wats the way out?

Ajay Mishra (Company Secretary)     17 February 2012

Hi

Actually the whole transaction is in valid.

Regards

CS Rajveer Rai, Gurgaon (CS)     17 February 2012

187C is not applicable as it is for when a company is a beneficial holder.

Further you can rectify your register of holding pass a board resolution for that and mention name of partners of the firm

prakash (Company Secretary)     17 February 2012

 Partnership firm is not considered as artificial person in eye of law, so that it cannot be member/shareholders of any company but partners of firms can be members of company. the section 187c is applicable if company is beneficiary owner, in our case 187C is not applicable. whole transaction is invalid, consider the matter in board meeting and transfer shares in the name of partners.