by Asok Nadhani

Nature of Partnership

1.1 Partnership

Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all (sec.4, para 1).

The person who enter into such relationship are called partners and collectively as firm and the name under which their business is carried on is called ‘firm name’ (sec.4, para 2).

Partnership Act : The law of partnership contained in the Indian Partnership Act, 1932 came into force with effect from 1^st October, 1932,

It extends to the whole of India except the State of Jammu and Kashmir (sec.1).

Example:

A, B and C entered into a partnership with each other to carry on the business under the name and style of ABC & Co. In this case, A, B and C are individually the partners and collectively a firm and ABC & Co. is the firm name.

1.2 Essential characteristics of Partnership

The essential features of a partnership are explained below:

Number of Partners

Two or more persons competent to enter into contract are called as partners and can form a valid partnership.

The minimum number of partners must be two. Sec. 11 of the Companies Act, 1956, provides that the maximum number of partners shall not exceed 10 in case of a banking business and 20 in case of any other business. If the number of partners exceeds the maximum limit, the partnership becomes an illegal association. The partnership ceases to exist if the number of partners gets reduced to one and the firm is compulsorily dissolved.

Example:

A, B and C were three partners carrying on a partnership business. Subsequently, A and B retired from the firm and C alone continued the business. In this case, there is no partnership as one person cannot be a partner with himself.

Partnership Agreement

The relation of partnership stems from a valid contract and not from status (sec. 5, para 1). Hence, a Hindu Undivided Family cannot be called as a partnership firm as every partner acquires his right by mere birth, i.e; by his status.

The agreement between the partners may be expressed (by words spoken or written) or implied from the conduct of the parties. A written agreement between the partners is called as a partnership deed.

Business

The partnership must be formed to carry on some legal business. If no business is carried on, there is no partnership. As per sec. 2(b), ‘business’ includes every trade, occupation and profession. Effecting an isolated transaction cannot be equated with carrying on business.

Joint acquisition of some property by two or more persons does not make them partners if no business is carried on. Thus, sharing of income of a property does not result in partnership.

Sharing of Profits

As per the definition of partnership, there must be an agreement between the partners to share the profits (and losses) arising from such business. If a person does not get any share of profits, he cannot be called as a partner. However, by way of an express agreement, one or more of the partners may not be liable for losses (called as ‘partner in profits only’). If only one partner is entitled to the entire profits, there shall be no partnership.

Example:

A and B agreed to work together as partners. But, they agreed that A shall receive all profits and shall pay wages to B. In this case, A and B are not partners as profit is not shared between them.

Mutual Agency

The law of partnership is based on principle ‘mutual agency’, an extension of law of agency. Accordingly,  every partner is an agent of all other partners, i.e., an act done by a partner binds the firm as well as all other partners of the firm. Even, every partner is a principal, since he is bound by the acts done by other partners. Thus, every partner performs dual role, i.e., role of a principal as well as role of an agent. The liability of a partner for the acts of other partners is in fact, the liability of a principal for the acts of his agent.

1.3 Classification of Partnership

Partnership can be classified as follows:

-         Particular Partnership,

-         Partnership for a fixed period,

-         Partnership at will.

Particular Partnership (Sec. 8)

Where the partnership is formed for a particular venture or undertaking as per the agreement between the partners, it is called as a Particular Partnership. Such a partnership automatically comes to an end after completion of the venture or undertaking.

Partnership for a fixed period

Where the partnership is formed for a fixed period of time as per the agreement between the partners, it is called as a Partnership for a fixed period. The partnership automatically comes to an end after completion of such specified period.

Partnership at Will (Sec. 7)

i) A partnership is said to be partnership at will if no provision is made regarding duration or term of partnership; and

Since no time or event is specified regarding the time of cessation of partnership, the partnership at will is dissolved when any of the partners gives notice in writing to all other partners of his intention to dissolve the firm. The firm shall be dissolved from the date mentioned in the notice as the date of dissolution or, if no such date is mentioned, the firm shall be dissolved from the date of communication of notice (sec.43).

Ii ) A Particular Partnership (partnership is formed for a particular venture or undertaking) or partnership is formed for a fixed period becomes a Partnership at Will if the partnership continues even after the venture is accomplished or the time expires. In such case, the rights and liabilities of the partners remain the same as were before completion of venture or expiry of the fixed period. [sec.17(b) & (c)]

1.2 Eligibility of Partners

As per Sec. 11 of the Indian Contract Act, 1872, a contract of partnership may be entered into by every person who is competent to enter into a contract.

Persons incompetent to enter into the contract

(a)   Alien enemy. An alien enemy cannot enter into a contract of partnership with an Indian subject. But, an alien friend can do so.

(b)   Minor. A minor cannot become a partner in a firm but he may be admitted to the benefits of partnership with the consent of all the other partners.

(c)   Person of unsound mind. A person of unsound mind is incompetent to enter into a contract of partnership.

(d)   Corporation. A corporation, i.e., a registered company, can enter into a contract of partnership as a single individual but not as a group of individuals comprising it.

Persons also are not entitled to become a partner :

Further, the following persons also are not entitled to become a partner -

-        A Burmese Buddhist husband and wife carrying on family business.

-        An employee of a business receiving a share of profit as remuneration.

-        The members of Joint Hindu Family carrying on a family business.

-        A widow or child of a deceased partner receiving a portion of the profit as annuity.

-        A lender of money to persons engaged or about to engage in any business.

1.3 Classification of Partners

Partners can be classified as follows:

1.3.1 Active Partner or Ostensible Partner

-         A partner who takes active part in the conduct of the partnership business is called as an Active Partner.

-         He acts as the agent of the other partners in the ordinary course of the business of the firm. So, any act done by the active partner, in the ordinary course of the business and in the name of the firm. binds himself and the other partners

-         If an active partner becomes insane or permanently incapable to perform his duties, any other partner can apply to the Court for dissolution of the firm. On retirement, he is required to give public notice. Otherwise, he may be held liable as a partner on the principle of ‘partnership by holding out’.

1.3.2 Dormant or Sleeping Partner

-         A partner who does not attend to the affairs of the firm and does not take active part in the conduct of the business of the firm is called as a Sleeping Partner.

-         The identity of a dormant partner is not disclosed to the outsiders and persons dealing with the firm.

-         He is liable to all the third parties for acts of the firm like all other partners. A firm cannot be dissolved on the insanity of a sleeping partner, or incapacity of a sleeping partner to perform his duties.

-         A dormant partner is not required to give public notice of his retirement and he cannot be held liable as a partner on the principle of ‘partnership by holding out’ since his identity is undisclosed. He is not liable for any act of the firm done after his retirement.

1.3.3 Nominal Partner

-         A partner is called as a nominal partner if he does not take active part in the affairs of the firm, nor does he supply any capital to the firm or share any profits or any other income from the firm. He just lends his name to the firm, without having any real interest in it.

-         The identity of a nominal partner is disclosed to the outsiders and persons dealing with the firm. He is liable to all the third parties for the acts of the firm as if he were an active partner. A nominal partner is required to give public notice of his retirement, otherwise, he may be held liable as a partner on the principle of ‘partnership by holding out’.

Example:

P is a business tycoon. He lets his son Q to use his name in his firm in order to push-up the sale of his firm. P is a nominal partner. He is liable to the firm’s creditors as any other partner of his son’s firm.

1.3.4 Partner in profits only

Sharing of profits in partnership implies sharing of losses. However, the partners may lawfully agree that one or more of them shall not be liable to bear losses. In such a case, the partner who is entitled to share the profits but is not liable for sharing of losses, is called as a ‘partner in profits only’.

A ‘partner in profits only’ is liable for debts of the firm like all other parties of the firm. If the firm incurs huge losses, he has to share the losses as the liability of the partners is joint and several and unlimited also.

A minor when admitted to benefits of partnership does not become a partner in the firm. Therefore, it can be said that a minor is a ‘partner in profits only’.

1.3.5 Partner by Estoppel or holding out (Sec. 28)

A partner by estoppel is one who either expressly or impliedly or by conduct represents himself or knowingly permits himself to be represented, to be a partner in a firm, but, in reality he is not so. He is liable as a partner in that firm to anyone who has on the faith of any such representation given credit to the firm, whether the person representing himself or represented to be a partner does or does not know that the representation has reached the person so giving credit [Sec. 28(1)].

If the retiring partner does not give public notice of his retirement and the continuing partners still use his name as a partner, the partner by estoppel shall be personally liable on the ground of holding out, to third parties who give credit to the firm on the faith of this representation. But in case of death of a partner, if the firm continues its business in its old name or of the deceased partner’s name as a part thereof, it shall not make his legal representatives or his estate liable for any act of the firm done after his death [Sec.28(2)]. 

Example:

Asim, Karim and Mahim are three partners in a firm. Asim retires from the firm without giving public notice of his retirement to the firm. He is liable to the creditors of the firm on the principal of holding out as he still hold out to the public that he is partner of the firm.

1.3.6 Sub-Partner

When a partner agrees to share whole or some part of his profits and property with a third person, such a third person is called as a Sub-Partner. Sub Partner has no rights of a partner and cannot represent himself as a partner in the firm. Even, he is not liable for the acts of the firm. A sub-partner is a transferee within the meaning of sec. 29 of the Partnership Act, 1932.

Since a sub-partner is not treated as a partner in a firm, his insanity or permanent incapacity is not a ground for dissolution of the firm. A sub-partner has no right against the firm also. He cannot file a suit against the firm. He can only claim his share of profits and property from the contracting partner.

1.3.7 Minor Partner

As per sec.11 of the Indian Contract Act, 1872, a contract with minor is void-ab-initio. So, a minor cannot be admitted as a partner in a firm.

However, a minor is entitled to the benefits of partnership with the consent of all partners [sec.30(1)] which is based on the rule that a minor cannot be a promisor, but he can be a  promisee or beneficiary. Therefore, the Partnership Act, 1932 provides that a minor can be admitted to the benefits of a partnership.

1.4 Rights and Liabilities of a Minor Partner[a1] 

 1.4.1 Rights and Liabilities of a Minor Partner before attaining majority

The rights and liabilities of a minor partner are different during the minority and on attaining majority.

Rights:

A minor has the following rights during his minority:

§  A minor has the right to receive the agreed share of property and of profits of the firm.

§  A minor partner may have access to and inspect and copy any of the accounts of the firm [sec.30(2)], but not the books of the firm.

§  Where he is not given the share of profits, he has the right to file a suit for share of the property or profit of the firms only if he wants to severe his connection with the firm [sec.30(4)].

Liabilities:

a.     A minor cannot be declared insolvent, but if the firm is declared insolvent, his share in the firm vests in the official receiver or official assignee.

b.    A minor partner is liable only to the extent of his share in the profits and property of the firm. If his liability exceeds his share of profits and property of the firm, the minor shall neither be personally liable nor his private estate will be liable [sec.30(3)].

1.4.2 Rights of a Minor after attaining majority

-         According to sec. 30(5) of the Act, at any time within six months of attaining majority or of obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later, the minor has to decide whether he shall continue in the firm or leave it.

-         The minor have to issue public notice that he has elected to become or that he has elected not to become partner in the firm and such notice shall determine his position as regards the firm.

-         If he fails to give such notice, he shall be treated as a partner in the firm on the expiry of the six months. The rights and duties of a partner depend upon the fact that whether he becomes a partner or not.

1.4.3 Right & Liabilities of Minor Partner when he elects to become Partner

Rights:

The minor partner can exercise the following rights when he elects to become a partner on attaining majority:

§  His share in the property and profits remains the same as was before becoming a partner [sec.30(7)].

§  His rights and liabilities will be similar to those of a full-fledged partner and as they were prior to the date on which he becomes a partner.

Liabilities:

A minor on attaining majority and electing to become a partner on attaining majority attracts the following liabilities:

§  Since, the minor was admitted to the benefits of partnership, he becomes personally liable to third parties for all acts of the firm.

§  His liabilities continue to be the same as they were prior to the date on which he becomes a partner.

1.4.4 Rights & Liabilities of Minor Partner not electing to become Partner

Rights:

A minor partner has the following rights when he elects not to become a partner on attaining majority:

§  He has right to sue the partners for his share of property and profits in the firm [sec.30(8)].

§  His rights will continue to be the same as they were till the notice is given.

Liabilities:

The minor partner has the following liabilities when he elects to not to become a partner on attaining majority:

§  His liability will be the same as before till the notice is given.

§  His share of property and profits will not be liable for any acts of the firm done after the date of the notice.

1.5 Incoming &  Outgoing Partner

Incoming Partner  : When a new partner is admitted in an existing firm, the person so admitted is called as Incoming Partner. Admission of a partner results in dissolution of the partnership, and the firm constituted after admission of the new partner is called as the reconstituted firm.

Outgoing Partner  When an existing partner retires from the firm, he is called as Outgoing Partner. Retirement of a partner results in dissolution of the partnership, and the firm constituted after his retirement is called as the reconstituted firm. The term ‘outgoing partner’ is also used to refer to a deceased partner, an expelled partner and an insolvent partner.

1.6 Distinction between Partnership and Joint Stock Company[a2] 

Basis of distinction	Partnership	Joint Stock Company
1.     Legal Status	A partnership firm has no separate legal entity apart from its members.	A company has a separate legal entity of its own apart from its members.
2.     Formation	Partnership firm comes into existence by an agreement between the partners. Registration of a partnership firm is optional.	A company comes into existence only after registration under the Companies Act, 1956.
3.     Maximum number of Members	The maximum number of members in case of partnership carrying on banking business is 10 and in case of any other business is 20.	There is no limit to the maximum number of members in case of Public Ltd. Company. But, in case of Private Company the maximum number should be 50.
4.     Transferability of Shares	A partner in a firm can transfer his share to an outsider with the consent of the other partners. Though the outsider becomes entitled to share profit and property transferred to him, but, he cannot become a partner of the firm.	A member of the company can transfer his shares and the transferee becomes a member of the company. In case of a public company, shares are transferable without consent of other members.
5.     Death or Insolvency of Members	Partnership gets dissolved on the death or insolvency of a partner.	Shareholders death or insolvency does not affect the company.
6.     Management	A firm is managed by its own partners.	A company is managed by a special body of shareholders called Directors.
7.     Contracts	A partner cannot enter into a contract with its own firm.	A shareholder of a company can enter into a contract with its own company.
8.     Audit	The audit of accounts of partnership firm is not compulsory.	A company legally required to have its accounts audited annually.
9.     Perpetual Succession	A partnership firm ceases to exist on death or insolvency of any or all the partners. Hence, a firm has no perpetual succession.	A company enjoys the benefit of perpetual succession. Hence, the continuity of the company doesn’t come to an end with any sort or incapacity of any or all the members of the company.
10.   Mutual Agency	There is mutual agency between the partners. So, the firm is bound by the acts of every partner.	No mutual agency exists between the members of a company. Hence, the members of the company are not bound by the acts of each other and the company also is not bound by the acts of members.
11.   Separate Property	A firm has no separate property.	A company has its own separate property.
12.   Capacity to Sue and be Sued	A firm cannot sue and be sued in its own name.	A company can sue and be sued in its own name.
13.   Liability	The liability of the partners is unlimited.	The liability of the members is limited.
14.   Minimum number of Persons	The minimum number of partners is 2.	In case of a private company, there must be at least 2 members and in case of a public company, the minimum number of members is 7.
15.   Minimum Capital	In case of a partnership firm, there is no specific amount of minimum capital.	Every private company and public company must have a minimum paid-up capital of Rs.1 lakh and Rs.5 lakhs respectively.
16.   Non-profit Activities	Partnership can be formed only for carrying business and not for any non-profit activities.	A company can be formed to carry on non-profit activities.
17.   Limitation of Action	As a partnership firm is not a separate person from its members, a creditor can execute a decree against the partners jointly and severally if he obtains it against the firm.	No creditor can recover any amount which is payable by company from its members.
18.   Distribution of Profit	Each partner is entitled to his fixed share of profits earned every year.	No member is entitled to a fixed share of profits earned every year.

1.7 Distinction between Partnership and Co-ownership

Basis of distinction	Partnership	Co-ownership
1.     Meaning	Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.	Co-ownership means joint ownership of some property which does not necessarily result in partnership.
2.     Mode of Creation	A partnership is created by an agreement.	Co-ownership may or may not arise by an agreement. It may also arise by operation of law of status.
3.     Mutual Agency	There is mutual agency between the partners. Thus, the firm is bound by the acts of every partner.	There is no mutual agency between the co-owners. So, a co-owner is not liable for the acts of any other co-owner.
4.     Business	A partnership cannot exist without ‘business’.	Co-ownership can exist without carrying on any business.
5.     Right of Partition	A partner cannot sue for the partition of partnership property in specie but he can sue his co-partners for the dissolution of the firm and accounts.	Every co-owner has a right to sue for the partition of joint property.
6.     Maximum number of Members	The maximum number of partners is 10 in case of a firm carrying on baking business and 20 in case of any other firm.	There is no maximum limit on number of co-owners.
7.     Lien for Expenses	A partner has a lien on partnership property for expenses incurred by him on partnership property on behalf of the firm.	A co-owner has no right of lien on joint property.
8.     Nature of Interest	Partnership involves community of interest.	Co-ownership may not involve any such interest.
9.     Transfer of Shares to Third Party	A partner cannot transfer his shares to a third party without the consent of the other partners.	A co-owner can transfer his shares to a third party without the consent of other co-owners. On transferring his shares, the transferee becomes a substitute of the co-owner who transfers his share to the other co-owner.
10.  Authority of Members	A partner is the agent of his co-partners.	A co-owner is not the agent of the other co-owners.

1.8 Distinction between Partnership and Club

Basis of distinction	Partnership	Club
1.     Meaning	Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.	A club is an association of persons formed with the object of not to earn profit but to promote interest of its members.
2.     Business	A partnership cannot exist without business.	A club is not created for carrying on any business.
3.     Sharing of Profits	A partnership is formed to share the profits of business carried on by it.	The purpose of formation of a club is not to earn the profits.
4.     Mutual Agency	There is mutual agency between the partners which implies that every partner is an agent of all other partners. Consequently, the firm shall be bound by the acts of every partner.	There is no mutual agency between the members of the club. Thus, no member is liable for any act of other members.
5.     Nature of Liability	The liability of every partner is joint and several.	A member is liable for his own acts only.
6.     Subscriptions	No partner is required to pay periodical subscriptions.	The members are required to pay periodical subscriptions for running the club.
7.     Death of Member	In case of death of a partner, his share in the assets of the firm vests in his legal heirs.	In case of death of a member, the legal heirs cannot get the right to become a member of the club.
8.     Dissolution	The partnership firm is automatically dissolved due to death or insolvency of a partner unless the agreement between the partners otherwise provides.	A club is not automatically dissolved in case of death or insolvency of any member.
9.     Maximum number of Members	The maximum number of partners is 10 in case of a firm carrying on banking business and 20 in case of any other firm.	There is no maximum limit of number of members of a club.
10.   Interest in Property	A partner has interest in the property of the firm.	A member of a club has no interest in the property of the club.

1.9 Distinction between Partnership and Association

Basis of distinction	Partnership	Association
1.     Meaning	Partnership is the relation between the persons who have agreed to share the profits of a business carried on by all or any of them acting for all.	An association is a body of persons who have come together for mutual benefit or for rendering services to the society.
2.     Business	A partnership cannot exist without business.	An association can exist without any business.
3.     Sharing of Profits	A partnership is formed to share the profits of business carried on by it.	An association is not formed with the object to earn the profits.
4.     Nature of Liability	The liability of every partner is joint and several.	A member of an association is liable for his own acts only.
5.     Dissolution	The partnership firm is automatically dissolved due to death or insolvency of a partner unless the agreement between the partners otherwise provides.	An association is not automatically dissolved due to death or insolvency of any member.
6.     Mutual Agency	There is mutual agency between the partners which implies that every partner is an agent of all other partners. Thus, the firm is bound by the acts of every partner.	There is no mutual agency between the members of an association. Thus, no member is liable for any act of other members.
7.     Maximum number of Members	The maximum number of partners is 10 in case of a firm carrying on banking business and 20 in case of any other firm.	There is no maximum limit on number of members of an association.

1.10 Distinction between Partnership and Joint Hindu Family

Basis of distinction	Partnership	Joint Hindu Family
1.     Governing Law	A partnership firm is governed by the provisions of the Partnership Act, 1932.	A Joint Hindu family is governed by Hindu Law.
2.     Mode of Creation	A partnership is created by an agreement.	Joint Hindu Family is created by status (sec.5, para 1). It can also arise by operation of law.
3.     Mutual Agency	There is mutual agency between the partners which implies that every partner is an agent of all other partners. Thus, the firm is bound by the acts of every partner.	There is no mutual agency between the members (i.e., coparceners) of the Joint Hindu Family.
4.     Authority of Members to carry on business	Every partner has an implied authority to carry on the business of the firm and to bind the firm by his acts in the ordinary course of the business of the firm.	Only ‘Karta’ has the implied authority to contract debts and pledge the credit and the property of the family for the purpose of family business, but the other coparceners cannot do so.
5.     Liability of Members	The liability of every partner of the firm is unlimited. Every partner is personally liable for discharging the partnership liabilities out of his partnership property along with his private property.	The liability of every coparcener is limited to the extent of his share in the family business. Though, they become personally liable if they are contracting parties. However, the liability of Karta is unlimited.
6.     Dissolution	The partnership firm is automatically dissolved due to death or insolvency of a partner, unless the agreement between the partners otherwise provides.	A Joint Hindu Family is not automatically dissolved due to death or insolvency of any coparcener or ‘Karta’.
7.     Right to inspect the Accounts	Every partner has a right to access and inspect and copy any of the books of the firm and ask for the account of profits and losses of the firm.	A coparcener when severing his connection with family cannot ask for accounts regarding past dealings or for the account of profits and losses.
8.     Position of Minor	A minor cannot become a partner in a firm, but, he can be admitted to benefits of partnership with the consent of all other partners.	A male minor can be a coparcener in a Joint Hindu Family business merely by birth.
9.     Share in Profits	Every partner is entitled to a fixed share of profits of the firm which is subject to a change by an agreement between the partners. In case of death of a partner, the share of the deceased partner in the assets of the firm devolves on his legal heirs.	No coparcener has a fixed share in profits of the business. The share of profits of coparceners can be automatically increased on death of a coparcener and can be automatically decreased on birth of a coparcener.
10.  Maximum number of Members	The maximum number of partners in case of a firm is 20 (10 in case of a firm carrying on banking business).	There is no maximum limit on number of coparceners of a Joint Hindu Family business.
11.  Admission of New Member	A new partner can be admitted in a firm only with the consent of all the existing partners.	In a Joint Hindu Family business, a male becomes a member by his birth.
12.  Female Members	In partnership, a female can become a full-fledged partner.	In a Joint Hindu Family business, a female does not become its member by birth.
13.  Registration	A partnership need not be compulsorily registered. But, indirectly, the law has made it compulsory by creating certain disabilities to an unregistered firm.	A Joint Hindu Family business does not require to be registered.
14.  Management	Every partner can take an active part in the process of management of the firm.	Only the manager can take part in the management procedure of the business.
15.  Effect of Insolvency	A partner ceases to be a member of the firm if he becomes insolvent.	A member of a Joint Hindu Family business shall remain to be a member even if he becomes insolvent.

1.11 Distinction between Sleeping Partner and Nominal Partner

Basis of distinction	Sleeping Partner	Nominal Partner
1.     Meaning	A partner who does not take active part in the affairs and conduct of the business of the firm is called as a Sleeping Partner.	A partner who has no real interest in the firm, and is a partner only in name is called as a Nominal Partner.
2.     Capital Contribution	A dormant partner supplies capital to the firm and other partners carry on the business of the firm.	A nominal partner does not contribute any capital to the firm.
3.     Disclosure of Identity	The identity of a sleeping partner is not being disclosed to the outsiders.	The identity of a nominal partner is made known to the outsiders.
4.     Interest in the Firm	A sleeping partner has business interest in the firm. But, he does not participate in the conduct of the business. He shares the profits of the business.	A nominal partner has no real interest in the firm. He takes a very nominal share of profits so as to comply with the legal requirements of being a partner.
5.     Requirement of Public Notice	A dormant partner is not required to give public notice of his retirement. Consequently, if a public notice of his retirement is not given, he cannot be held liable as a partner on the principle of ‘partnership by holding out’.	A nominal partner is required to give public notice of his retirement. Otherwise, he may be held liable as a partner on the principle of ‘partnership by holding out’.
6.     Purpose of Induction as a Partner	A person is taken as a sleeping partner so as to comply with some legal requirement or for arranging the financial resources.	The purpose of admitting a nominal partner is to use the name of such person to promote the business of the firm.

For more details, refer to Mercantile law, by Asok Nadhani, BPB Publications,www.bpbonline.com, bpbpublications@gmail.com