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CS Executive · Company Law and Practice · Introduction to Company Law

Sundaram & Sons, an existing partnership firm in Chennai with several partners, applies to register under Section 366 as a company limited by shares. Which statement about the word 'company' in that section is correct?

The word company in Section 366 includes a partnership firm, limited liability partnership, cooperative society, society or any other business entity formed under another law that applies for registration. A partnership firm is therefore eligible to apply, so it is not excluded.

  1. AIt includes a partnership firm, LLP, cooperative society, society or other business entity formed under another law which applies for registrationCorrect
  2. BIt excludes partnership firms but includes cooperative societies
  3. CIt includes only entities already incorporated under a prior Companies Act
  4. DIt includes only limited liability partnerships

Explanation

Section 366(1) says that for the purposes of the Part, 'company' includes any partnership firm, LLP, cooperative society, society or any other business entity formed under any other law that applies for registration. So a partnership firm is covered. Option excluding firms is contrary to the text, and companies registered under earlier Companies Acts are actually barred by the proviso.

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