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For SharePoint 2010, Can the "Manage Permissions" permission level be modified to allow; a) creation of groups, b) assignment of permission levels to custom groups EXCEPT Full Control perm level, c) assignment of groups to libraries and list, d) breaking inheritance BUT not creating permission levels

Thank you in advance for your assistance. Regards, Maria

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No, not OOB, when you remove "manage permission" permission, you will not be able to assign and remove permission. The user will be able to create groups if they have "create group" permission but not be able to assign permissions to it.

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