SIDC Module 6 Business structures and the participating organisation question: carry on a business together for profit without incorporating anything

SIDC Module 6Business structures and the participating organisation

Twenty-five traders want to carry on a business together for profit without incorporating anything. Can they do so as a conventional partnership?

A No, as a conventional partnership may have at most 10 partners
B No; above 20 persons they must incorporate or form an LLP
C Yes, as the Partnership Act 1961 sets no maximum number of partners
D Yes, provided the firm is registered with the Companies Commission

Show the answer and explanation

Answer: B. No; above 20 persons they must incorporate or form an LLP

Section 13 of the Companies Act 2016 prohibits any association or partnership of more than twenty persons from being formed to carry on business for profit unless it is incorporated as a company under the Act or formed under another written law. A limited liability partnership under the Limited Liability Partnerships Act 2012 is formed under another written law, and section 6 of that Act lets two or more persons form one. Registering the business name does not lift the 20-person limit, and the limit is 20, not 10. Source: Companies Act 2016 (Act 777) s.13; Limited Liability Partnerships Act 2012 (Act 743) ss.3, 6 (as at October 2026).

Common mistake

Thinking the Partnership Act alone governs partnership size, missing the 20-person cap in the Companies Act.

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Original study material mapped to the public SIDC Module 6 syllabus. Unofficial, not endorsed by SIDC or the SC. Verify figures and rules against current guidance before relying on them.