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Types of business
• Sole proprietorship in Pakistan
• Partnership in Pakistan
• Limited liability company in Pakistan
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Why Partnership?
• Easy Formation
• More Capital
• Better Management
• Skilled Employees
• Easy Dissolutions
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Introduction
Partnership is governed in
Pakistan, through the provision of
the “Partnership Act, 1932.”
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Meaning
A Partnership is a Voluntary association of
Two or more persons, who contribute ,
Money, property , time , skill to carry on
business for profit and to share the
losses of the business.
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Definition
“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.
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Definition
• Prof Haney:
“ Partnership is the relation between
persons to make contracts who agree to
carry on a lawful business with a view to
gain.”
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Characteristics
• Legal Entity.
A Partnership has no separate legal entity apart
form its members.
Firms and the partner are not separate from
one another.
The rights and liabilities of the firm are
considered the rights and liabilities of the
partner.
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• Unlimited Liability
– In case of loss if the business sources are
insufficient to meet claim of the creditors, the
private properties of the partners can be sold.
• Agreement
– A partnership is the result of an agreement
between persons.
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• Control
– Depends on the Terms of the Agreement.
• Mutual Agency
– Each partner acts as agent of the other
partners of the firm. Because he binds himself
to the activities of other partner.
• Numbers of Partners.
– At least 2 persons
– Maximum 20 persons
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Sharing of Profits
• Share the profit of the business according
to their agreement.
• If no agreement then Equally.
• Loss according to agreed ratio.
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Partnership Deed
• The Partnership agreement in writing is
called Partnership Deed.
• The Partnership deed contains the
Provisions:
1. The Name of Firm.
2. The names and address of all Partners.
3. The nature of Business of A firm
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4. The ratio of sharing the profit and
losses.
5. The Rights , duties and Liabilities of a
Partner.
6. The restrictions on partners , if any.
7. The Rules regarding the Admission ,
Retirement , death and Expulsion of
partner from frim.
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8. The keeping of proper books of accounts
and preparation of Accounts.
9. The Circumstance under which the firm
shall dissolve.
10.The Methods of Solving disputes among
the partners and appointment of
Arbitrator.
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Kinds of Partners
• Liability
• Participation in Management
• Shares of Profit , Etc… any other basis
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• Active Partner
Takes an active part in the Management
Public Notice before Retirement
Also known as Working Partner.
• Sleeping Partner/ Dormant Partner
Does not take an Active Part in
Management, Notice is not required in
case of Retirement, Also liable.
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• Partners in Profits only.
Shares the Profit of the firm.
Not liable for the Losses
• Secret Partner
Whose membership Kept secret from
Outsiders
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• Senior Partner
Key role in Management , due to
experience ,age, capability , and other
skills. Besides that investment more in the
Business.
• Junior Partner
Less experience , small investment,
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Minor Partner
Competent to contract 18 age
With the Consent of all the Partners
He may be admitted to the benefits of
Partnership by an agreement with his
guardian.
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• Nominal Partner
One who lends his name and reputation to
the firm, does not invest, does not
participate, he is liable.
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Types of Partnership
• Partnership-at-will
• No provision is made in the agreement
regarding the duration of firm.
• Formed for Unlimited Period.
• Project complete after it continues.
• Notice of Termination , given by any
partner at any time.
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Particular Partnership
• Formed to do a particular business. Or
• For a particular period.
• A Partnership is dissolved immediately on
he completion of the particular business.
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Limited Partnership. (England
based)
• Some Partners may be with Limited
Liability
• At least on have unlimited Liability
• Registered Firm
• Limited partner inspects the books
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DISSOULTION OF FIRM
• BY AGREEMENT
• COMPULSORY
• CONTINGENT
• BY NOTICE
• BY THE COURT
– Insanity , Permanent Incapacity , misconduct,
– Breach , Transfer of interest,
– Continuous losses , Just and Equitable
