PATNERSHIP ACT

COMPANIES ACT
CO-OPERATIVE SOCIETIES ACT
LIMITED LIABILITY PATNERSHIP
PRESENTED BY
NEENU SUSAN GEORGE
 PARTNERSHIP ACT, 1932
 The law of partnership is contained in the Indian Partnership Act, 1932, which
came into force on 1st Oct., 1932.

 The present Act superseded the earlier law relating to Partnership, which was
contained in Chapter XI (sec 239 to sec 266) of the Indian Contract Act,1872.

MEANING OF PATNERSHIP

 The INDIAN PARTNERSHIP ACT’ 1932 Section.4 of the Indian Partnership

Act, 1932 defines Partnership in the following terms:

 “Partnership is the relation between persons who have agreed to share the
profits of a business carried on by all or any of them acting for all.”
Meaning of Partner, Firm and Firm Name

 Partners -Persons who have entered into partnership with one another are
called individually.
 Firm -Collectively formed entity.
 Firm-name -The name under which their business is carried on.
Elements of Partnership:

 Partnership is an association of two or more than two persons.

 Partnership must be the result of an agreement between two or more persons.
 The agreement must be to carry on some business.
 The agreement must be share profits of the business.
 Business must be carried on by all or any of them acting for all.
Who can become a partner?
 Any person who is competent to contract can enter into partnership agreement.
The position of following persons need special consideration :
 Minor, Alien, Person of unsound mind , Company, Firm
 Minor: A minor is not competent to contact, hence he cannot enter into
partnership contact. However he may be admitted to the benefits of
partnership, if all the partners agree to do so.
 Alien: An alien enemy cannot be partner in an Indian firm.
 Person of unsound mind: A person of unsound mind, not being competent to
contract cannot enter into a partnership contract.
 Company: A company, if authorized by its articles of association can enter into
partnership because it is a person competent to contract in the eyes of law.
 Firm: A firm cannot enter into partnership contract. If a firm, at all enters into
partnership in that case, the members become partners in the other firm in their
individual capacity.
 Criteria Of Partnership

 Any two or more than two persons can join together for creating
Partnership. Section 11 of the Companies Act , 1956 imposes
limit as to maximum number of persons in a partnership for the
purpose of carrying : ·
 Banking Business – There can be maximum of 10 persons
 Any other purpose – There can be maximum of 20 persons.
 Procedure of Registration
 According to the India Partnership Act 1932, there is no time limit as such for
the registration of a firm. The firm can be registered on the date when it is
incorporated or any such date after so. The requisite fees and fines must be
paid. The procedure for such a registration is as follows,
• Application to the Registrar of Firms in the prescribed form (Form A).
Nowadays this facility is even available online. Such an application must
contain certain basic details about the firm such as, --Name of the Partnership
Firm --Name and address of all partners --Place of business (address of main
and branch offices) --Duration of the partnership --Date of joining of partners -
-Date of commencement of business
• The duly signed copy of the Partnership Deed (which contains all the terms
and conditions) must be filled with the registrar
• Deposit/pay the necessary fees and stamp duties
• Once the registrar approves the application, the firm will be entered into the
records. And the registrar will also issue a certificate of incorporation.
 Real test of partnership
 The true test of partnership is the existence of a 'Mutual Agency'
relationship, i.e. the capacity of a partner to bind other partners by his
act done in the firm's name and be bound by the acts of other partners.
 Sharing of profits is an essential elements of partnership but it is not a
conclusive proof of partnership. Sharing of profits is Prima Facie
evidence.
 Thus partnership can be presumed when a. There is an agreement to
share the profits of business and b. The business is carried on by all or
by any of them acting for all.
 The relation among partners cab be ascertained as under: a. If there is
an express contact The real relation is ascertained from the partnership
contract. b. If there is no express contract The real relation is
ascertained from all the relevant factors such as contract of parties,
books of account, statement of employees etc.
 Duties of a Partner

 General duties of a partner

 To indemnify for fraud
 To indemnify for willful neglect
 To attend duties diligently without remuneration
 To share losses
 To account for any profit
 To account and pay for profits of competing for business
 Rights of a Partner
 Right to take part in the Conduct of the Business
 Right to be consulted
 Right of access to books
 Right to remuneration
 Right to share profits
 Interest on capital
 Interest on advances
 Right to be indemnified
 Right to stop the admission of a new partner
 Right to retire
 Right not to be expelled
 Right of outgoing partner to carry on a competing business
 Right of outgoing partner to share subsequent profits
 Right to dissolve the firm
 Types of Partners
1. Active Partner
 A person who takes active interest in the conduct and management of the business
of the firm is known as active or managing partner. He carries on business on
behalf of the other partners.
2. Sleeping Partner
 A sleeping partner is a partner who ‘sleeps’, that is, he does not take active part in
the management of the business. Such a partner only contributes to the share capital
of the firm, is bound by the activities of other partners, and shares the profits and
losses of the business.
3. Nominal Partners
 A nominal partner is one who does not have any real interest in the business but
lends his name to the firm, without any capital contributions, and doesn’t share the
profits of the business.
4. Partner in Profit only
 When a partner agrees with the others that he would only share the profits of the
firm and would not be liable for its losses, he is in own as partner in profits only.
5. Sub Partners
 one of the existing partner of firm A is having partnership with other firm B.
6. Incoming Partners
 The new partner who will be joining the partnership firm. It is also known as a
Admission of a partner. Incoming partner will be introduced into an existing
partnership only with the consent of all partners and he is only liable for the
transactions which were made after he has joined in the firm.
7. Outgoing Partners
 A partner who is going to leave a particular firm with purposely or to he/she might
be died or expelled by a firm. It can be in a from of; Retirement of a partner,
Expulsion of a partner, Insolvency of a partner, Death of a partner
8. Partner by Estopple or holding out
 A partner by estoppel is someone who is not a partner of a firm, but allows others
to think that he is a partner, through his behaviour or conduct.
 A partner by holding out is someone who is not a partner of a firm, but knowingly
allows the firm to project to others that he is a partner of the firm.
 Dissolution of Partnership
 Section 39 of the Indian Partnership Act, provides that “the dissolution of the
partnership between all the partners of a firm is called the dissolution of a
firm.” It implies the complete break down of the relation of partnership
between all the partners.
THANK YOU