Information

Who is a Partner?

Persons who have entered into partnership with one another are called individually, "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm-name".

Admission & Retirement of Partner

Whenever there is an admission of a new partner or retirement of a partner, or expulsion or insolvency of a partner, etc., the partnership firm undergoes reconstitution. Sections 31 to 32 of the Indian Partnership Act, 1932.

Admission or Introduction of a Partner (Section 31)

According to this section, the consent of all the existing partners is necessary before introducing a new partner into a partnership firm. This is subject to the provisions of Section 30 regarding minors in the firm. Further, the new partner has no liability for any actions of the firm done before his admission.

The retirement of a Partner (Section 32)

A partner retires when he ceases to be a member of the firm without ending the subsisting relations between the other members of the firm or between the firm and other parties. If a partner withdraws from a firm by dissolving it, then it is a dissolution and not retirement of a partner. The retirement of a partner from a firm does not dissolve it.

In a partnership, a partner may retire:

  • With the consent of all the partners,
  • In accordance with an express agreement by the partners, or
  • The partnership is at will, by giving notice in writing to all the other partners of his intention to retire

Advantages of Partnership :-

  • Two heads (or more) are better than one
  • Your business is easy to establish and start-up costs are low
  • More capital is available for the business
  • You’ll have greater borrowing capacity
  • High-calibre employees can be made partners
  • There is opportunity for income splitting, an advantage of particular importance due to resultant tax savings
  • Partners’ business affairs are private
  • There is limited external regulation
  • It’s easy to change your legal structure later if circumstances change

Documents / Information :-

  • Partnership deed
  • ID Proof / Details of Admitting partner
  • Consent letter / Resignation letter
  • Other related documents

FAQ :-

I am not a citizen of India. Can I be a partner in an Indian firm?

The Partnership Act does not prohibit a non-citizen from joining an Indian partnership firm, subject to necessary clearances and permissions from satisfactory authorities in this regard.

Can a minor be a partner in my partnership firm?

No, a minor cannot become a partner. However, your minor son can be admitted to the benefits of the partnership firm. He can share the profits of the partnership business with the consent of the other partners. He can also access, inspect and copy the accounts of the firm. Though the minor is not personally liable for the losses of the firm, his share in the partnership business is liable for the losses incurred.

What are my rights and duties as a partner in my firm?

Following are the rights of a partner:

  • To take part in the business.
  • To share the profit or loss of the business.
  • To inspect and make copies of the books of the firm.
  • To receive remuneration for taking part in the business if specified in the partnership deed.
  • To receive interest on capital if specified in the partnership deed.

Following are the duties of a partner:

  • Carry on the business.
  • Be just and faithful to each partner.
  • Disclose true accounts of the firm.
  • Furnish full information of all things affecting the firm.
What are my Limitations as a Partner?

As a partner you cannot do the following without the consent of the other partners:

  • Submit a dispute relating to the business to arbitration.
  • Open a bank account on behalf of the firm in your own name.
  • Compromise or relinquish any claim or portion of a claim of the firm.
  • Withdraw a suit or proceeding filed on behalf of the firm.
  • Enter into partnership with an outsider on behalf of the firm.
  • Acquire or transfer immovable property belonging to the firm.
  • Admit any liability in a suit or proceeding against the firm.
Can HUF become partner in a firm?

An HUF is not a legal person and so cannot enter into partnership with either an individual or another HUF.

However, The Karta or the manager of a Hindu Undivided Family can become a partner of a firm in his individual capacity. The Karta will be treated as the representative of the Hindu Undivided Family by the partnership firm.

Can a Company become partner in a Firm?

A company is a juristic person and therefore can become a partner in a partnership firm, if it is authorized to do so by its objects.

Information
Who is a Partner?

Persons who have entered into partnership with one another are called individually, "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm-name".

Admission & Retirement of Partner

Whenever there is an admission of a new partner or retirement of a partner, or expulsion or insolvency of a partner, etc., the partnership firm undergoes reconstitution. Sections 31 to 32 of the Indian Partnership Act, 1932.

Admission or Introduction of a Partner (Section 31)

According to this section, the consent of all the existing partners is necessary before introducing a new partner into a partnership firm. This is subject to the provisions of Section 30 regarding minors in the firm. Further, the new partner has no liability for any actions of the firm done before his admission.

The retirement of a Partner (Section 32)

A partner retires when he ceases to be a member of the firm without ending the subsisting relations between the other members of the firm or between the firm and other parties. If a partner withdraws from a firm by dissolving it, then it is a dissolution and not retirement of a partner. The retirement of a partner from a firm does not dissolve it.

In a partnership, a partner may retire:

  • With the consent of all the partners,
  • In accordance with an express agreement by the partners, or
  • The partnership is at will, by giving notice in writing to all the other partners of his intention to retire
  • Two heads (or more) are better than one
  • Your business is easy to establish and start-up costs are low
  • More capital is available for the business
  • You’ll have greater borrowing capacity
  • High-calibre employees can be made partners
  • There is opportunity for income splitting, an advantage of particular importance due to resultant tax savings
  • Partners’ business affairs are private
  • There is limited external regulation
  • It’s easy to change your legal structure later if circumstances change
  • Partnership deed
  • ID Proof / Details of Admitting partner
  • Consent letter / Resignation letter
  • Other related documents
I am not a citizen of India. Can I be a partner in an Indian firm?

The Partnership Act does not prohibit a non-citizen from joining an Indian partnership firm, subject to necessary clearances and permissions from satisfactory authorities in this regard.

Can a minor be a partner in my partnership firm?

No, a minor cannot become a partner. However, your minor son can be admitted to the benefits of the partnership firm. He can share the profits of the partnership business with the consent of the other partners. He can also access, inspect and copy the accounts of the firm. Though the minor is not personally liable for the losses of the firm, his share in the partnership business is liable for the losses incurred.

What are my rights and duties as a partner in my firm?

Following are the rights of a partner:

  • To take part in the business.
  • To share the profit or loss of the business.
  • To inspect and make copies of the books of the firm.
  • To receive remuneration for taking part in the business if specified in the partnership deed.
  • To receive interest on capital if specified in the partnership deed.

Following are the duties of a partner:

  • Carry on the business.
  • Be just and faithful to each partner.
  • Disclose true accounts of the firm.
  • Furnish full information of all things affecting the firm.
What are my Limitations as a Partner?

As a partner you cannot do the following without the consent of the other partners:

  • Submit a dispute relating to the business to arbitration.
  • Open a bank account on behalf of the firm in your own name.
  • Compromise or relinquish any claim or portion of a claim of the firm.
  • Withdraw a suit or proceeding filed on behalf of the firm.
  • Enter into partnership with an outsider on behalf of the firm.
  • Acquire or transfer immovable property belonging to the firm.
  • Admit any liability in a suit or proceeding against the firm.
Can HUF become partner in a firm?

An HUF is not a legal person and so cannot enter into partnership with either an individual or another HUF.

However, The Karta or the manager of a Hindu Undivided Family can become a partner of a firm in his individual capacity. The Karta will be treated as the representative of the Hindu Undivided Family by the partnership firm.

Can a Company become partner in a Firm?

A company is a juristic person and therefore can become a partner in a partnership firm, if it is authorized to do so by its objects.