Section 366 of CA 2013 : Section 366: Companies Capable Of Being Registered

Explanation using Example

Imagine a scenario where a partnership firm, which has been operating a catering business for several years, decides to expand its operations and attract more investors. The partners wish to limit their personal liability and structure the business to allow for easier investment and shareholding. They consult a legal advisor who suggests registering the firm as a private limited company under the Companies Act, 2013.

Following the advisor's guidance, the partners hold a meeting where they agree to convert their partnership into a private limited company. They understand that under Section 366 of the Companies Act, 2013, their existing business entity can register as a company limited by shares. This will give them the benefit of limited liability, meaning their personal assets will be protected in case the company faces financial difficulties.

The partners assent to the registration with a unanimous vote, fulfilling the requirement of a majority of members' approval as mentioned in the law. They undertake the necessary procedures to register the firm, now complying with the guidelines set forth in Section 366, and successfully convert their partnership firm into a 'XYZ Catering Services Private Limited'.