1. Legal Capacity of a Partnership Firm

• A partnership firm is not a separate legal entity, but can hold assets
  
• It operates through its partners collectively under the law
  
• The firm can enter into contracts, including investment agreements
  
• There is no legal bar preventing a firm from investing in shares
  
• The ability depends on the firm’s objectives and mutual consent of partners
  

2. Role of the Partnership Deed

• The partnership deed should mention investment as an allowed activity
  
• If the deed is silent, partners must mutually agree before investing
  
• Clear clauses on investment authority help avoid future disputes
  
• Profit or loss from such investments should be distributed as agreed
  
• Any restrictions or limitations should be recorded in writing
  

3. Operational Requirements for Investment

• The firm must open a Demat and trading account in its name
  
• KYC norms must be fulfilled for the firm and its authorized partner
  
• A partner may be nominated to manage the investment activities
  
• Records of transactions must be maintained for internal and legal use
  
• Investments must align with the firm’s stated business purpose
  

4. Risk and Responsibility of Partners

• All partners share the risks and returns from investments
  
• Losses, if any, are treated like business losses unless stated otherwise
  
• Decisions should be taken collectively or by authorized persons
  
• Unauthorized investments can lead to internal disputes
  
• Proper documentation protects all partners from misunderstandings
  

5. Regulatory and Compliance Considerations

• The firm must comply with SEBI and stock exchange norms
  
• Certain investment limits may apply under regulatory guidelines
  
• Investment income must be disclosed in firm’s accounts and returns
  
• If the firm engages regularly in trading, it may be treated as a separate business activity
  
• External approvals are not required unless specified by law or agreement