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Partnership Firm

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					PARTNERSHIP FIRM
Rights of Partners
Every partner has right-
1.to take part in the conduct and management of
   the firm’s business.
2. to express opinion.
3. To inspect and copy books of account and
   records of the firm.
4.To get an equal share in the profit
5.To receive interest on loans and advances made
   by him to the firm.
6.To be indemnified for the expenses incurred and
   losses sustained.
7.To continue in the firm unless expelled
 8.to retire in accordance with terms of the
  partnership agreement.
IMPLIED AUTHORITY OF PARTNER

 To buy and sell goods on behalf of the firm.
 To borrow money on behalf of the firm and
  where necessary ,to pledge the stock-in-trade
  for this purpose.
 To receive payments on behalf of the firm
  and issue valid receipts for the amount so
  received.
 To draw cheques, accept, make and endorse
  bills of exchange, promissory notes etc. on
  behalf of the firm.
 To employ persons of carrying out the firm’s
    business.
   FORMATION OF PARTNERSHIP
   -Partnership through an agreement –oral or
    written among two or more persons.
   -All terms and conditions of partnership must
    be in writing.
   -A written agreement is referred to as the
    PARTNERSHIP DEED or ARTICLES OF
    PARTNERSHIP.
 Partnership deed must be stamped properly
  and each partner should be given copy of
  deed.
 Partnership deed is NOT a public document.
 It can be altered with the mutual consent of
  all the partners.
Contents of the partnership
deed
 Name of the firm
 Names and addresses of all the partners
 Nature of the firm’s business
 Date of the agreement
 Principal place of the firm’s business
 Duration of partnership, if any.
 Amount of capital contributed by each
  partner
Contents of partnership deed
(contd.)
 Proportion in which the profits and losses are
    to be shared.
   Loans and advances by partners by partners
    and interest payable on them.
   Amount of withdrawal allowed to each
    partner and the rate of interest.
   Amount of salary or commission payable to
    any partner.
   Duties, powers and obligations of all the
    partners.
    contents contd.

 Maintenance of account and audit.
 Mode of valuation of goodwill on admission,
    retirement or death of a partner.
   Procedure for dissolution of the firm and
    settlement of accounts.
   Arbitration for settlement of disputes among the
    partners.
   Arrangements in case, a partner becomes
    insolvent.
   Any other clause(s),specific to the business.
Registration of the Firm

 Registration of firm under The Partnership
  Act,1932 by the Registrar of Firms appointed
  by the Govt.
 Though registration of partnership firm not
  compulsory, unregistered firm suffers from
  certain disabilities.
 Registration of firm is thus desirable.
PROCEDURE FOR REGISTRATION

 A partnership firm can be registered at ANY
  TIME by filing a statement in the prescribed
  form.
 The form should be duly signed by all the
  partners.
 Should be submitted to Registrar of firms
  along with prescribed fee.
Information contained in Statement
for Registration
 Name of the Firm
 Principal place of its business
 Name of other places where firm is carrying on
  business
 Names and permanent addresses of all partners
 Date of commencement of firm’s business and
  the date of joining of firm by each partner
 Duration of the firm, if any.
 Nature of the firm’s business.
 On receipt of statement and the fees,
  Registrar makes an entry in the Register of
  Firms.
 The firm is then considered to be registered.
 The Registrar then issues a Certificate of
  Registration.
Dissolution of Firm

 Dissolution of firm follows dissolution of
  partnership i.e.all partners are dissolved by
  termination of original partnership
  agreement or change of contractual
  relationship among partners.
 A partnership is dissolved by insolvency,
  retirement, incapacity, death, expulsion of a
  partner or on expiry/completion of the
  term/venture of partnership.
MERITS OF PARTNERSHIP

   Ease of formation
   Larger financial resources,if big no. of partners
   Specialisation and balanced approach
   Flexibility of operations
   Protection of minority of interest.
   Personal incentive and supervision.
   Capacity for survival
   Better human and public relations
   Business secrecy
Demerits of partnership

 Unlimited liability
 Limited resources-partners cant be more than 10
    in banking business and 20 in other type of
    business.
   Risk of implied agency (an incompetent/dishonest
    partner can bring /imply disaster for whole firm)
   Lack of harmony/mutual understanding may
    affect good decision making in such firms.
   Non-transferability of capital outside without
    consent of other partners
   Normally ,public imposes distrust in partnerhips.

				
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posted:3/28/2012
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