• How to acquire a Partnership by a a Pvt Limited

We have a private limited company which is the process of evaluating an acquisition of a dairy farm. This dairy farm is currently owned by a partnership ( with 2 partners). The assets including land, infrastructure and livestock all belongs to the partnership. Currently, there is a term loan and the farm is the primary security against the loan. 

Now the questions that i need answers for are:
a) Can a private limited company acquire a Partnership and what is the process for the same.
b) If yes, then will all the assets and liabilities of the partnership will those be automatically become part of the Private limited company or there will be some transaction that may be required to be done like land transfer and reregistrations etc.
c) secondly since there is a bank involved and we will also be taking a loan from a bank to fund part of the transaction, how does this needs to be managed? will we have to enter into a tripartite agreement with the partnership and their bank first and then the loan take over can be done with my bank? 

It will be great if someone can throw a light on how the sequence of activities will happen in such a transaction. 

Please do let me know if you need any further information at my end to provide assistance with this query.
Asked 5 years ago in Business Law

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3 Answers

1) pvt limited company can acquire partnership firm

2) value the net assets of the firm

3) value the shares of pvt ltd company

4) shares can be issued to the partners of the firm in proportion to their capital

5) obtain NOC from the bank and other debtors

6) once firm is acquired company would be responsible for payment of the debtors

Ajay Sethi
Advocate, Mumbai
84936 Answers
5617 Consultations

5.0 on 5.0

Private limited company is a separate legal entity registered under companies Act, 2013. The directors and shareholders of the private company are not personally liable for the liabilities of the company. Shareholders have limited liability and are responsible only to the extent of their share in the company.

The following may be ensured before acquiring the partnership firm by the private limited company:

1. Check either MOA of the company empowered it or not.

2. Consent of all partners obtained or not

3. All statutory due of the partnership firm have been disbursed or not

4. Proper valuation of the partnership firm done or not

5. Appropriate resolution for the sake has been passed or not.

6. Consent of the creditors has been taken or not.

7. How adjustment of assets and liability of the partnership firm to be adjusted.

8. How partner's account/settlement disbursed.

To your questions:

a) Yes it is as good as acquiring anything by the private limited company in its routine business.

b) You can see the above check list in this regard.

c) This is a matter to be discussed with your bank officials and an arrangement can be arrived at accordingly.

T Kalaiselvan
Advocate, Vellore
75050 Answers
1263 Consultations

5.0 on 5.0

1. A private limited company can acquire the existing partnership firm with the assets and liabilities. It is to be done carefully in view of the rights of the creditors of the existing partnership firm.

2. The loan will be given to you and not the partnership firm that you intend to acquire. A tripartite agreement will not be required in this scenario.

3. Since the loan is secured through the farm the permission from the bank will inevitably be required before acquisition.

4. Get all the instruments drafted by a lawyer.

Ashish Davessar
Advocate, Jaipur
30752 Answers
923 Consultations

5.0 on 5.0

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