can a limited company be a partner in a partnership

[FCA Chandrasekaran Ramadurai]

Yes, a limited company can be a partner in a partnership firm, provided it is permissible under the company's articles of association or memorandum of association. The Companies Act does not prohibit a company from forming a partnership with other entities, including individuals and other companies. A company, being a legal entity, can enter into a partnership agreement as long as its objects, as defined in its governing documents, permit it. [1, 2, 3, 4]

Here's a more detailed explanation: [1, 1]

• Legal Framework: The Companies Act does not explicitly prevent companies from becoming partners in a partnership firm. [1, 1]
• Permitted Objects: A company can become a partner if its Memorandum of Association (MOA) or Articles of Association (AOA) include a clause allowing it to do so, often under the broader object of "carrying on any business". [2, 2, 3, 3]
• Limited Liability: While a company can be a partner, its liability is limited to its contributions as a partner in the partnership firm. This means the company's shareholders and directors are not personally liable for the partnership's debts or obligations. [5, 5, 6, 7]
• Tax Implications: The profits of the partnership firm are not typically taxed at the company level. Instead, they are taxed within the partnership, and the partners (including the company) are liable for their share of the profits as per the Income Tax Act. [8, 8]
• Practical Considerations: While a company can be a partner, it's crucial to carefully review the company's MOA/AOA, draft a comprehensive partnership deed, and consider the legal, tax, and liability implications before proceeding. Consulting legal experts is advised to ensure compliance and mitigate potential risks. [2, 2, 9, 9]

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[1] https://manupatra.com/roundup/370/Articles/Can%20two%20limited%20Companies.pdf

[2] https://www.indiafilings.com/learn/who-is-eligible-for-partnership/

[3] https://www.quora.com/Can-a-private-limited-company-enter-into-partnership-with-an-another-partnership-firm-in-India

[4] https://www.indiafilings.com/learn/who-cannot-be-a-partner-in-a-firm/

[5] https://www.delawareinc.com/blog/general-partnership-vs-limited-partnership/

[6] https://www.wealthbridgecs.com/sg-guide/llp-vs-private-limited-guide

[7] https://www.qualitycompanyformations.co.uk/blog/benefits-of-forming-limited-liability-partnership/

[8] https://www.quora.com/Can-a-private-limited-company-and-a-partnership-firm-become-a-member-of-a-public-limited-company

[9] https://www.quora.com/Can-a-company-become-a-partner-in-a-partnership-firm