Ls 6 Flashcards
Features of Partnership Firm
Two or more persons Agreement Sharing of profit Lawful business Mutual agency Utmost good faith Unlimited liability Restrictions on transfer of interest Joint ownership Separate entity
Types of partnership
General partnership
Limited liability partnership
Partnership at will
Particular partnership
Features of LLP
Body cooperate having separate legal entity
Must maintain annual accounts
Must be registered, no limit in maximum number of partners
LLP liability of partners is limited to their agreed contributions
Liability becomes unlimited incase if partners carry out act of defraud
advantages of LLP
Stable than general partnership Liability limited No limit in partners Body cooperate can be partner in llp Partner is not liable for unauthorized act of other partners
Disadvantages of llp
Registration under act
Less Secrecy of business to fulfill legal requirements
Credit standing of llp is reduced due to limited liability
Less flexibility of operations due to legal formalities
It can’t raise public loan
Liability becomes unlimited of unlawful business carried on
Types of partners
Active partner Sleeping partner Silent partner Minor partner Partner by estoppel Partner by holding out Partner in profit only Limited partner Sub partner
Merits of partnership
Ease of formation Larger financial resource Combined ability Direct motivation Close supervision Flexibility of operations Secrecy Protection of minority interest Cooperation Scope for expansion
Demerits of partnership
Limited resources Unlimited liability Uncertain life Conflicts Risk of implied authority Restrictions on transfer of business Reduced public confidence Lack of Secrecy Suitability
Rights of partner
Right to take part and conduct and management
Right to be consulted and express his opinion
Right to access or inspect and copy and books of accounts
Right to an equal share in profit
Right to receive interest on loans and advances
Indemnified for the expense incurred
Comparison between sole proprietorship and partnership
Number of members Agreement Registration Capital Management Secrecy Quick decisions Governing law Sharing of profit Flexibility Mutual agency Scale of operations Risk Continuity
