Meaning of partnership
When two or more persons join hands to set up a business and share its profits and losses, they are said to be in partnership.
Definition of partnership
‘Relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all’.
Essential features of partnership are
1. Two or More Persons – minimum member 2
2. Agreement- oral or written
3. Unlimited Liability of Partnership
4. Sharing of Profit
5. Mutual Agency - business of a partnership concern may be carried on by all the partners or any of them acting for all
6. Business The agreement should be to carry on some business on regular business.
|Partnership Act does not specify the maximum number of persons, but the Section 464 of Indian Companies Act, 2013, restricts the number of partners to 50. |
Rights of a Partner
1. Every partner has the right to share profits or losses with other partners in the agreed ratio.
2. Every partner has the right to take part in the conduct of the business.
3. Every partner has the right to be consulted in the matters related to partnership business.
4. Every partner has the right to inspect and have a copy of the books of accounts.
5. Every partner has a right to disallow the admission of a new partner.
6. Every partner is the joint owner of the partnership property.
7. If a partner has given loan to the firm, he has a right to receive interest at agreed rate. If the rate of interest is not agreed, it is paid @6% p.a.
8. If a partner incurs expenses or makes payment on behalf of the firm, he has a right to be indemnified by the firm.
9. Every partner has a right to retire from the firm after giving a proper notice.
Limited liability Partnership (LLP)
The limited liability partnership (LLPs) in India came into existence with the enactment of ‘limited liability partnership act 2008’ which lay down the law for the formation and regulation of limited liability partnerships.
The limited liability partnership (LLPs) means a partnership formed and registered under this act.
Nature of limited liability partnership (LLPs)
I. A LLP is s body, formed and incorporated under this act.
II. It is legal entity separate from its partners.
III. A LLP shall have a perpetual succession
Partnership Act does not specify the maximum number of persons, but the Section 464 of Indian Companies Act, 2013, restricts the number of partners to 50.
Difference between ordinary partnership and LLP
|1.||Applicable law||Partnership act 1932||LLP ACT,2008|
|2.||Registration||Optional||Mandatory but with the registrar of companies|
|3.||Creation||By agreement||By Law|
|4.||Separate legal Entity||Entity It is not a Separate legal||It is not a Separate legal Entity|
|5.||Perpetual succession||A partnership doesn’t have a Perpetual succession||A LLP shall have a perpetual succession|
|6.||Number of members||Minimum 2 & maximum 50||Minimum 2 & maximum no limit|