Proprietorship firm - a shareholder

[Guest]

Whether Proprietorship firm ,represented by an individual as proprietor ,can be shareholder of a pvt limited company in India?is there any restriction of becoming a shareholder as capacity as proprietorship firm in stead of individal himself for whom no restriction as any individual can be shareholder

[Surender Gupta]

I think proprietorship firm is nothing but a name given by the individual to his activities undertaking in relation to business. Therefore, proprietorship firm has no independent identity. On the other side, since individuals are allowed to do business activities in the name of firm called as proprietorship firm, I think an individual would be allowed to be a member / shareholder of the company in the name of his proprietor ship concern. However, detailed provisions of companies are to be scrutinized in this regard.

[Guest]

Yes, there is no bar in the statutory provision of companies act that an individual in the name name of proprietor ship firm can not become a member. Therefore, you may buy shares in the name of proprietorship firm.

AI Summary

Can a Proprietorship Firm Be a Shareholder in a Private Limited Company? Exploring the Companies Act. A discussion on whether a proprietorship firm, represented by an individual proprietor, can be a shareholder in a private limited company in India. One participant argues that a proprietorship firm lacks independent identity and is merely a business name for an individual, suggesting that the individual can hold shares in the firm's name. Another participant concurs, stating there is no statutory restriction under the Companies Act preventing an individual from becoming a shareholder in the name of a proprietorship firm. Both emphasize reviewing detailed company provisions for clarity.