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    Chapter-4 Formation of Partnership

    Uploaded by

    Fatima Noor
    The document discusses the formation and registration of partnerships under Indian law. It defines a partnership deed as a written partnership agreement that typically includes provisions about the firm name, partners' names and addresses, nature of business, location, capital contributions, profit/loss sharing ratios, interest rates, partner compensation and drawings, circumstances for dissolution, partner rights and duties, valuation of goodwill, accounting periods, admission and retirement of partners, dispute resolution, and requirements for keeping proper books. Registration provides advantages to the firm, partners, and creditors, while non-registration limits a firm's and partners' ability to sue. The key differences between sole proprietorships and partnerships are also summarized.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Chapter-4 Formation of Partnership

    Uploaded by

    Fatima Noor
    18 views9 pages
    The document discusses the formation and registration of partnerships under Indian law. It defines a partnership deed as a written partnership agreement that typically includes provisions about the firm name, partners' names and addresses, nature of business, location, capital contributions, profit/loss sharing ratios, interest rates, partner compensation and drawings, circumstances for dissolution, partner rights and duties, valuation of goodwill, accounting periods, admission and retirement of partners, dispute resolution, and requirements for keeping proper books. Registration provides advantages to the firm, partners, and creditors, while non-registration limits a firm's and partners' ability to sue. The key differences between sole proprietorships and partnerships are also summarized.

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    The document discusses the formation and registration of partnerships under Indian law. It defines a partnership deed as a written partnership agreement that typically includes provisions about the firm name, partners' names and addresses, nature of business, location, capital contributions, profit/loss sharing ratios, interest rates, partner compensation and drawings, circumstances for dissolution, partner rights and duties, valuation of goodwill, accounting periods, admission and retirement of partners, dispute resolution, and requirements for keeping proper books. Registration provides advantages to the firm, partners, and creditors, while non-registration limits a firm's and partners' ability to sue. The key differences between sole proprietorships and partnerships are also summarized.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    18 views9 pages

    Chapter-4 Formation of Partnership

    Uploaded by

    Fatima Noor
    The document discusses the formation and registration of partnerships under Indian law. It defines a partnership deed as a written partnership agreement that typically includes provisions about the firm name, partners' names and addresses, nature of business, location, capital contributions, profit/loss sharing ratios, interest rates, partner compensation and drawings, circumstances for dissolution, partner rights and duties, valuation of goodwill, accounting periods, admission and retirement of partners, dispute resolution, and requirements for keeping proper books. Registration provides advantages to the firm, partners, and creditors, while non-registration limits a firm's and partners' ability to sue. The key differences between sole proprietorships and partnerships are also summarized.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 9

    Formation of Partnership

    Chapter-4
    Formation of Partnership
     Agreement between the partners, and it can be oral or
    written

     CONSIDERATIONS AT THE TIME OF ENTERING AN


    AGREEMENT:
    1. Partner must be selected with care
    2. Objective of the firm must be lawful
    3. Rights & duties of partners must be mentioned in detail
    4. Preferably get your firm registered.
    Partnership Deed
    Partnership agreement in written form is called ‘Partnership Deed’. Generally
    contains the following provisions.
    1. Name of the firm
    2. Names & addresses of partners
    3. Nature of business
    4. Place where the business will be carried
    5. Amount of capital invested by each partner
    6. Duration of partnership
    7. Ratio of profit/losses sharing
    8. Rate of interest, if any, allowed on capital.
    9. Rate of interest on loans given by partner to the firm.
    10. Rate of interest to be charged on drawings.
    11. Amount partner can draw from the firm.
    12. Amount of compensations or salary to partners for their services.
    13. Circumstances under which firm can dissolve.
    14. Rights, duties & liabilities of partners.
    15. Method of valuation of goodwill.
    16. Period of accounting year.
    17. Rules regarding retirement, death and admission of a partner.
    18. Methods of dispute handling & appointment of an arbitrator.
    19. Power of a partner to retire after giving notice.
    20. Rules to determine amount to be paid to the deceased partner and the
    manner of payment.
    21. Rules of expulsion of a partner from the firm
    22. Keeping & preparing proper books of accounts.
    Two Types of Partners
    1.Partnership-at-will (Section 7).
    2.Particular Partnership
    a. Firm’s Name
    b.Registration of the firm (Section 58).
    • Application duly filled and submitted with fee.
    • Certification (Section 59).
    • Change in particulars (Section 60-63).
    • False information (Section 70).
    Two Types of Partners
    EFFECTS OF NON-REGISTRATION: (SECTION 59)
    1. Suit by Partner
    2. Suit by Firm
    3. Suit against Partner
    4. Suit by the Third Party
    5. Claim of Adjustments
    Two Types of Partners
    EXCEPTIONS FOR NON-REGISTERED FIRM (Section 69)
    1. The third party can sue the firm for his rights
    2. The partners can sue for the dissolution of the firm
    3. The partners can sue for the accounts of the dissolved firm
    4. The partners can sue for the realization of the property of the dissolved firm
    5. The dissolved firm can sue to recover damages for the breach of the contract
    6. Firm and its partners can sue third party for adjustment of claim up to
    Rs.100
    7. The receiver can sue to realize the property of the insolvent partner
    8. The partners can refer dispute to the arbitrator
    9. A partner can sue another partner for damages due to misconduct
    10. The firm may sue the third party to restrain from using patent right…
    Advantages of Registration
    1. Advantages of Firm
    a. A registered firm can sue any partner of the firm
    b. A registered firm can file a suit against the third party for enforcement of rights arising from
    contract
    c. Registration increases goodwill
    d. A registered firm can claim adjustments from the third party
    e. A registered firm enjoys some concession in income tax
    2. Advantages of Partners
    f. The partners can sue in the court to settle the dispute
    g. The partners can sue the firm for their claims
    h. It encourages new persons to become partners
    i. Partners not liable for any debt after they retire…
    3. Advantages to Creditors
    j. The partners cannot prevent the creditors from getting membership of the firm
    k. The creditors of the registered firm can hold all the partners liable for the payment of its debts.
    Difference between Sole Proprietorship & Partnership
     1. Act: No separate act regulates sole  1. Partnership Act 1932 regulates partnership
    proprietorship  2. Agreement is required amongst the person
     2. Formation: Easy to form
     3. All partners share the profit
     3. Profit: A single person gets the profit
     All partners bears the loss
     4. Loss: A single person bears the loss
     5. Easy to raise capital
     5. Capital: Difficult to raise capital
     6. Medium sized business
     6. Size: Small
     7. Managed by many persons
     7. Management: Handled by one person
     8. All partners have knowledge of the business
     8. Secrecy: Only one person has accesses to
    information  9. Not easy transfer of shares
     9. Transfer of interest: Easy  10. Between 2 to 20
     10. Membership: One  11. Depends upon event or persons
     11. Dissolution: Depends up on one person  12. Suitability for medium scale business
     12. Suitability: For small scale business  13. Possibility of exception high
     13. Expansion: Low chances  14. Low
     14. Motivation: High  15. More
     15. Managerial Skills: Low  16. Decision making slow
     16. Decision making fast

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