Can a company be a partner or a shareholder in another company or another registered partnership?

In Pakistan, it is indeed possible for a company to be a partner or a shareholder in another company or a registered partnership. The specific legal framework governing such arrangements can be found in the Companies Act, 2017, and the Partnership Act, 1932.A partnership agreement or memorandum in the case of the latter, will be beneficial to protect the company’s interests in that capacity.

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Under the Companies Act, a company can acquire shares in another company, either through direct subscription to the shares issued by the company or through the purchase of existing shares from existing shareholders. This allows the acquiring company to become a shareholder in the target company, entitling it to certain rights and benefits associated with shareholding.

Similarly, under the Partnership Act, a company can also become a partner in a registered partnership. A partnership is a form of business association where two or more persons agree to carry on a business together and share the profits and losses. While partnerships are typically formed between individuals, there is no legal restriction on a company being a partner in a registered partnership.

However, it’s important to note that specific legal and regulatory requirements must be followed when a company becomes a partner or a shareholder in another entity. These requirements may include compliance with regulatory filings, disclosure of shareholding/partnership interests, and adherence to corporate governance standards.

To ensure compliance and to understand the specific legal implications of such arrangements, it is recommended to consult with legal professionals or experts familiar with Pakistani company and partnership laws. They can provide guidance tailored to your specific situation and ensure that all legal requirements are met.To contact our team send us an email at aemen@joshandmak.com 

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