Companies Act Section 464 — Prohibition of association or partnership of persons exceeding certain number
CHAPTER XXIX MISCELLANEOUS
Commercial / Corporate
Summary
Sub-section (1) states that no association or partnership may be formed for carrying on any business aimed at making a profit for itself or its members if it has more than a prescribed number of persons, unless it is registered as a company under this Act or is formed under some other law currently in force. The proviso adds that the prescribed number of persons cannot exceed one hundred.
Sub-section (2) lists two exceptions where sub-section (1) does not apply. Under clause (a), a Hindu undivided family carrying on any business is exempt. Under clause (b), an association or partnership formed by professionals who are governed by special Acts is also exempt.
Sub-section (3) states that every member of an association or partnership that carries on business in violation of sub-section (1) is punishable with a fine of up to one lakh rupees, and each such member is also personally liable for all liabilities incurred in that business.
Official Text
(1) 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.
(2) Nothing in sub-section (1) shall apply to—
(a) a Hindu undivided family carrying on any business; or
(b) an association or partnership, if it is formed by professionals who are governed by special Acts.
(3) Every member of an association or partnership carrying on business in contravention of sub-section (1) shall be punishable with fine which may extend to one lakh rupees and shall also be personally liable for all liabilities incurred in such business.