Thursday, 26 March 2020

Partnership Act and Limited Liability Act

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Partnership Act and Limited Liability Act


A partnership is defined as the relationship between persons who have agreed to share
profits of a business carried on by all, or by any of them acting for all.
A partnership firm may be registered at any time by post, or delivering to the Registrar of
Firms of the area in which any place of business of the firm is situated or proposed to be
situated but the Registration of Firms is Optional.
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’
A written agreement between the partners which covers the various clauses is called
Partnership deed. The partnership deed is required to be stamped according to the provisions
of the Stamp Act, 1899.
The relation of the partners of a firm to one another arises through an agreement between
them. Such an agreement may be express or may be implied from the course of dealings
between them.
An outgoing partner means a partner who has retired from a firm. The firm is reconstituted
by the remaining partners.
The dissolution of partnership between all partners of a firm is called dissolution of the
firm but if the dissolution of partnership is not between all the partners, it would not
amount to dissolution of firm, it is called dissolution of partnership.
In case of company limited by shares, the liability of the members is limited to the
nominal value of shares held by them.
Fully paid shares leads to nil liability.
LLC is only for the limited liability but not for the unlimited liability


Dissolution of the Firm: The dissolution of partnership between all the partners of a firm is called
the dissolution of the firm.
Economic Interest: It means a member’s share of the profits and losses of an LLC and a member’s
right to receive distributions of the LLC’s assets.
Foreign LLC: It means an LLC formed under the laws of any foreign jurisdiction.
Goodwill: It is an accounting concept meaning the value of an entity over and above the value
of its assets.
LLC: Limited Liability Company
LLP: It is the partnership where all or some partners have limited liability.
Partnership Deed: It is an agreement between the partners which covers the various clauses
required for management of the firm.

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