By virtue of which Section of the Companies Act 2013, the Central Government is empowered to prescribe the maximum number of partners in a firm, but the number of partners can not be more than 100?
By virtue of which Section of the Companies Act 2013, the Central Government is empowered to prescribe the maximum number of partners in a firm, but the number of partners can not be more than 100?
Solution
Section 464 of the Companies Act 2013 empowers the Central Government to prescribe the maximum number of partners in a firm, subject to the ceiling of 100 partners.
This section provides regulatory control over partnership firms by setting an upper limit on the number of partners. The rationale is that if a business requires more than 100 partners, it should be incorporated as a company rather than continuing as a partnership firm, as larger entities need more formal corporate governance structures.
The key provisions under Section 464 are:
- Central Government has the power to prescribe maximum number of partners
- The absolute maximum limit is capped at 100 partners
- Any firm exceeding this limit must convert into a company
This provision ensures that partnerships remain suitable for smaller to medium-sized businesses, while larger enterprises adopt the company form with appropriate regulatory framework and public accountability.
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