Can a Corporation Be a Partner in a Partnership?

By Mike Broemmel

Corporations share many abilities possessed by individuals, including the ability to enter into a partnership. Corporations may be partners with other corporations or with individuals, and have a variety of ways to contribute to the partnership. Some partnerships may include a corporation with a more active role in the business's function, while others feature a corporation as a way to help control the financial liability of the other partners.

Uniformity of Laws

Laws regarding corporations and what they can do and own exist on a state-by-state basis. The legislatures in each state enact what commonly is called a "corporation code" or set of laws that govern the establishment, operations and rights of corporations. Although each state establishes its own corporation code, or set of corporation laws, the basic elements of these laws essentially are the same across the United States.

Legal Status

The formation of a corporation establishes an independent legal person, an entity that possesses the same essential abilities as an individual for engaging in business transactions of all types. The legal status of a corporation comes into existence upon the filing of articles of incorporation with a particular state government, usually the office of the secretary of state. The legal status continues unless a corporation allows its articles or incorporation to lapse or faces a revocation of them for failure to comply with state law.

Ready to incorporate your business? Get Started Now

Permitted Activities

Without exception, the corporation laws in all 50 states allow a corporation to own property as well as to create and enter into most of the same kinds of contracts permitted of individuals. The corporation laws in every state permit a corporation to become a partner in a partnership. In accordance with the law, the articles of incorporation will contain a clause specifically allowing a corporation the ability to enter into a partnership or to engage in any lawful act or activity.

Becoming a Partner

Shareholders represent the ultimate decision-makers of a corporation. Shareholders typically must decide whether a corporation should enter into a partnership with another legal entity, including an individual or another corporation. Shareholders do have the ability to transfer their right to someone else, usually the board of directors or the chief executive officer or similar person charged with running the business on a day-to-day basis. The decision to enter into a partnership, or to grant someone the authority to make that decision, is done through a resolution passed by the shareholders.

Ready to incorporate your business? Get Started Now
Corporation vs. Officer vs. Owner



Related articles

Texas Corporation's Right to Form a Subsidiary

Corporate law has been well settled in the United States for decades. Every state, including Texas, has enacted statutes that govern the conduct of corporations formed and operating within their state borders. Ninety percent of these statutes promulgate corporate legal tenets that are uniformly observed throughout the land. Texas law gives a corporation formed under its umbrella the same rights and privileges granted to corporate entities formed in other states, including the authority to hold an ownership interest in another entity as the parent of a subsidiary.

If I Have a C Corporation, Can I Operate in Multiple States?

All corporations are formed under state law and are distinct legal entities, separate from their owners — the shareholders. A corporation's legal residence, or domicile, is the state where it is formed; it is referred to as a "domestic corporation" of that state. Any corporation can transact business in other states — referred to as "foreign" states — as long as the corporation is in good standing with its domicile state and complies with the foreign state's laws.

How to Form an Umbrella Corporation

A corporation is a legal entity formed under state law that has an identity separate from its owner-shareholders. An umbrella corporation is a standard corporation that owns and controls one or more subsidiary corporations. A subsidiary is a corporation that is at least majority-owned by another corporation — in this case, an umbrella or parent corporation.

LLCs, Corporations, Patents, Attorney Help

Related articles

Can an S-corp Be a Partner in an LLP?

It is sometimes advantageous for individuals and legal entities such as corporations to form business partnerships ...

Who Legally Owns a Corporation?

There are different schools of thought as to who legally owns a corporation. Many people argue, as the late economist ...

Can I Have Many Businesses Under My Corporation?

A corporation is an independent legal entity that is formed under state law. It has an existence that is separate from ...

Can a C-Corporation Be a Partner in a Partnership?

Typically, a C corporation is allowed to be a partner in a partnership. However, as is often the case in corporate ...

Browse by category
Ready to Begin? GET STARTED