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.

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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.

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