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
Can I Have Many Businesses Under My Corporation?



Related articles

Model Business Corporations Act

The Model Business Corporations Act, first created by the American Bar Association, is a body of statutory law that was designed to govern corporate affairs. Although the MBCA has no legal force unless enacted by a state legislature, all 50 states have enacted at least a portion of the MBCA.

How to Re-Open a Dissolved Company

In theory, corporations can exist forever, but they can also go out of business or be dissolved for other reasons. For example, you and the other corporate shareholders may dissolve one corporation to pursue another business venture; however, you can typically recreate your original corporation if you decide to go back to it. Corporations are independent legal entities formed under state law, and each state has its own laws that control the ability of dissolved corporations to reactivate.

How to Amend Bylaws in a New York Law Corporation

A corporation's bylaws set its internal rules and procedures. For example, bylaws usually include rules for the election of the board of directors and define the rights of corporate stockholders. A New York law corporation may need to amend its bylaws for various reasons. Provisions may become outdated or no longer serve the corporation's needs. Regardless of the reason, a corporation doing legal business in New York must follow the state regulations for a for-profit corporation when changing its existing bylaws.

LLCs, Corporations, Patents, Attorney Help Incorporation

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 ...

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 ...

Corporation vs. Officer vs. Owner

A business that operates as a corporation generally drafts bylaws – a document that governs all aspects of the company. ...

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 ...

Browse by category
Ready to Begin? GET STARTED