kinds of partners
TRANSCRIPT
Partnership is the relation between persons who have agreed to share the profits of a business carried
on by all or any one of them acting for all
Partnership Act 1932
Content
Essentials element of partnership
Kinds of partners
Types of partnership
Rights of partner
Duties of partner
Partnership Deed :Partnership Deed is the document that defines the rights and obligations of partners. Besides names, address and occupation of partners it lays down the duration of partnership, nature of business, profit sharing ratio, right to interest, salary, commission etc.
Essential elements of partnership:
Association of two or more persons;
Existence of a contract;
Carrying on a business;
Sharing of profits;
Prevalence of mutual agency.
Kinds Of Partners
There may be different kinds of partners in a partnership firm. The important classification of partners is given below:Active partners,Sleeping partner,Nominal partner,Partner in profits only,Senior partner,Junior partner,Secret partner,Minor partner.
An invested person who is involved in the daily operations of the partnership. An active partner
helps run the business to enhance his or her returns and is therefore considered a material participant. This person typically shares more risk and return
versus a limited or silent partner.
'ACTIVE PARTNER'
one whose name does not appear in the firm, and who takes no active part in the business, but who
has an interest in the concern, and shares the profits, and thereby becomes a partner, either
absolutely, or as respects third persons.
sleeping partner
Person who has an interest in the success of a partnership firm but, legally, is not partner because
he or she neither owns a part of the firm nor actively participates in its affairs.
Nominal Par tner
InvestorExpreience
Partner whose level of involvement (and the associated authority, responsibility, risks,
and rewards) is greater than that of the junior partners, and at par with other senior partners.
senior partner
A partner in a partnership who is less important than a senior partner, but may become a
senior partner later.
junior partner
Rights Of PartnersSection 12 & 13 of the partnership act
Rights to take part in management Every partner has a right to take part in the conduct of the business.
Rights to inspect books
Every partner has a right to check the books of account of the firm
and to get the copies.Rights to be consulted
Every partner has a right to be consulted and heard before any matter is decided.
Rights to share profit Every partner has a right to share equally in the profits earned by the
firm, irrespective of his amount of capital contribution.
Rights to interest on capital
A partner is not entitled to receive interest on capital contributed by him..
Right to use property
Every partner of the firm is co-owner in the property of firm and he has a right to use it for the best benefit of the business of the allowed.
Rights to admit and expel partner
A new partner cannot be admitted in the firm and an old partner cannot be expelled from the firm without the prior consent of all the partners.
Right to give opinion Nature of the partnership business cannot be altered without the prior approval
of all the partners.
Duties Of Partners:
To work for common advantageTo be faithfulRender true account To indemnify for fraudNot to claim remunerationTo share profits and lossesTo act within authorities given
A type of business where owners share joint and several responsibility for the entire amount of debt
and other liabilities amassed by the business. Unlimited liability is not capped at a maximum amount and exists regardless of the amount of
investment each owner has personally made. If the business is unable to meet any financial obligations
or settle any outstanding liabilities, the owner's personal assets can be seized to satisfy the debts.
UNLIMITED LIABILITY'
Limited liability partnerships (LLP) retain the tax advantages of the general partnership form, but offer some personal liability protection to the participants. Individual partners in a limited
liability partnership are not personally responsible for the wrongful acts of other partners, or for the
debts or obligations of the business.
Limited Liability Partnerships (LLP)