Companies Act - When Registration of Companies is Mandatory (Section 464)?

If you are running small business with your two friends, is it mandatory for you to register your company ?

If you are running small business with your 100 facebook friends as association or partenership, is it mandatory for you to register your company ?

Answer is Yes if you are doing something for benefit with your facebook friends.!!

Section 464 have detailed provisions in this regard. There is punishment also if  you are doing business with 100+ facebook/insta friends.

Let's discuss Section 464 in bit technical jargon.

Section 464

Section 464 essentially mandates your association or partnership where more than 100 people are involved.

Below are some important points
  • There is association/partnership/individual members of more than 100 people
  • They are carrying out business
  • Object of business is acquisition of gains

If  above conditions are satisfied then such association/partnership/individual members must registers themselves as a company.

Are there any exceptions ?

Yes, below are some of the exception wherein there is gang of 100 plus people and carrying out business but still not required to register.

  1. Hindu Undivided Family
  2. Association/Partnership by professionals which are governed by special acts. For example say some Act provides that Lawyers can form association of more than 100 persons.  Other examples like Association of CA/CS.
And what if there these 100+ folks keep on carrying their business ?

Section 464 provides punishment for such scenario. This punishment is up to 1 Lakh Rs for members.

Apart from fine, such association will have no legal status and will be illegal association.

Here are some important case laws related to Section 464. Do Ctrl+F after landing on that page as it contains many case laws.


That's pretty much all about Section 464.


Legalfundaa

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