Question

Assertion (A): In order to form a partnership, there should be at least two persons coming together for a common goal. The maximum number of partners is 50 (fifty) as prescribed by the Central Government.

Reason (R): As per Sec. 464 of the Companies Act 2013, the Central Government is empowered to prescribe a maximum number of partners, but the maximum number of partners cannot exceed 100. The central government has prescribed the maximum number of partners to be 50.

In light of the above statements, choose the most appropriate answer from the options given below:

Options

• Both (A) and (R) are correct and (R) is the correct explanation of (A).

• Both (A) and (R) are correct but (R) is not the correct explanation of (A).

• (A) is true but (R) is false.

• (A) is false but (R) is true.

Answer 1

Both (A) and (R) are correct and (R) is the correct explanation of (A).

Explanation:

A minimum of two persons is required to form a partnership. As per Section 464 of the Companies Act, 2013, the Central Government is empowered to prescribe the maximum number of partners, which cannot exceed 100. The government has prescribed 50 as the maximum number through Rule 10 of the Companies (Miscellaneous) Rules, 2014. Therefore, both the assertion and the reason are correct, and the reason correctly explains the assertion.