Section 464 of CA 2013 : Section 464: Prohibition Of Association Or Partnership Of Persons Exceeding Certain Number

Explanation using Example

Imagine a group of 120 individuals decide to start a real estate business together with the aim of making profit. According to Section 464(1) of the Companies Act, 2013, they cannot form a partnership or association because the number of people exceeds the prescribed limit, which is not more than 100 for such business ventures. To legally carry on their business, they must register as a company under the Companies Act or form their business under another applicable law.

However, if this group were a Hindu undivided family business or a partnership of chartered accountants (professionals governed by a special Act like the Chartered Accountants Act, 1949), Section 464(2) clarifies that they would be exempt from the restriction in sub-section (1).

If they ignore this law and proceed without registering, as per Section 464(3), each of the 120 individuals would be subject to a fine which may extend to one lakh rupees. Furthermore, they would also be personally liable for any debts or liabilities incurred by their unregistered association.