Question

The partnership firm does not become an illegal association when _________.

• A. The number of partners in a banking business exceeds 10
• B. The number of partners in a non-banking business exceeds 10
• C. The number of partners in a banking business exceeds 20
• D. The number of partners in a non-banking business exceeds 20

Answer 1

The correct option is B The number of partners in a non-banking business exceeds 10

Companies Act 2013 has clearly stated that maximum of 50 partners must be there for any non-banking partnership firm. So, if the members of a partnership firm exceeds 10, it doesn't becomes an illegal association.

In other options there is a chance of partnership being called an illegal association because more than 20 partners in banking or non-banking firm can be a problem for rivals and they may file a case against it.