Section 464: Prohibition of association or partnership of persons exceeding certain number
Companies Act, 2013 · Chapter XXIX: Miscellaneous · In force
This section prohibits associations or partnerships with too many members from carrying on business to make a profit unless they are registered as a company.
Penalty
(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.
The section, clause by clause
What the section says
In plain terms
(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:
An association or partnership with more than the prescribed number of people, not exceeding 100, cannot carry on a business to make a profit unless it is registered as a company under this Act or formed under another law.
provisoProvided 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—
The rule in sub-section (1) does not apply to a Hindu undivided family or an association of professionals governed by special Acts.
(2)(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.
Each member of an association or partnership that breaks the rule in sub-section (1) can be fined up to 1 lakh rupees and is personally liable for all business liabilities.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
1. The first proviso omitted by Act 29 of 2020, s. 66 (w.e.f. 11-2-2021).
2. Subs. by s. 66, ibid., for “Provided further that” (w.e.f. 11-2-2021).
3. Subs. by s.66, ibid., for “Provided also that” (w.e.f. 11-2-2021).
Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.