Clarification on section 464 of the Companies Act, 2013 in Paper No. 2, Business Law,
Ethics and Communication at Intermediate (IPC) Level
The students are hereby informed that according to section 464(1) of the Companies Act, 2013, no association or partnership consisting of more than such number of persons as may be prescribed shall be formed for the purpose of carrying on any business that has for its object the acquisition of gain by the association or partnership or by the individual members thereof, unless it is registered as a company under this Act or is formed under any other law for the time being in force:
Provided that the number of persons which may be prescribed under this sub-section shall not exceed one hundred.
Further, the Companies (Miscellaneous) Rules, 2014, provides that no association or partnership shall be formed, consisting of more than 50 persons for the purpose of carrying on any business that has for its objects the acquisition of gain by the association or partnership or by individual members thereof, unless it is registered as a company under the Act or is formed under any other law for the time being in force.
Thus, the students may note that for all purposes, the limit of 50 persons shall hold good and any association or partnership consisting of more than 50 persons for the purpose of carrying on any business that has for its object the acquisition of gain by the association or partnership or by the individual members thereof, unless it is registered as a company under this Act or is formed under any other law for the time being in force, shall be deemed to be an illegal association.
Corrigendum in the Practice Manual of Paper No. 2, Business Law, Ethics and Communication [Intermediate (IPC) Level] in the printed copy (Edition: December, 2014)
In chapter 6 –unit 1, students are advised to delete question no. 56 and its answer given on page 6.43.
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