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Following safeguard needs to be specified in retirement deed:-
- Date of the retirement from the partnership
- Compensation paid on the retirement by partnership firm.
- Liabilities of the departing and continuing partners clearly defined
- New shareholding partner
- Relinquishment by the retiring partner o...
Wazzeer Professional Network
ProfessionalPartner A and Partner B started a partnership with equal working capital in January 2014. Then Partner B could not bring more funds and Partner A had to step in and contributed 95% of the capital by 2017. Partner A was sleeping partner (not mentioned in deed, just understood). However, Partner A found that the firm was making profits which were not being disclosed by Partner B. So Partner A decided to withdraw from the firm and Partner B agreed to return the working capital and bring in another partner. Questions:
1) Partner A is completely unaware of how the firm was being run. He had given Power of Attorney to Partner B to conduct the business. So what are the safeguards he needs to specify in the retirement deed so that he will not be liable for anything in the future? 2) The partnership deed contained the following clause - "firm shall pay interest @ 12% per annum, to the partners on the amount of capital contribution or loans advanced by each of them respectively and the profits or losses of the business of the firm shall be arrived at after accounting for the interest so payable as a business expenditure of the firm". The deed does not specify whether the interest payable is simple interest or compound interest. Is there any legal precedent or stipulation which can clarify this so that partner A can claim the correct amount? Thank You
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Wazzeer Professional Network
ProfessionalFollowing safeguard needs to be specified in retirement deed:-
- Date of the retirement from the partnership
- Compensation paid on the retirement by partnership firm.
- Liabilities of the departing and continuing partners clearly defined
- New shareholding partner
- Relinquishment by the retiring partner of any property owned by the partnership business;
- Power of attorney and undertaking by retiring partner
- Dispute resolution
- Declarations of the retiring partner
- Confidentiality and Intellectual Property Rights
- No dues of retiring partner
- Debt will be paid by the continuing partners
- Undertaking that he will not use the name of the Firm
- Change of partnership in bank account
- No part in decision making after retirement.
The interest paid by the firm to the partner should be as per section 40 (b) of partnership act which says that the interest to the partner cannot pay more than 12% simple interest per annum. So if in partnership it is not specified also then we will consider as per partnership act.
‘Get a Wazzeer’ to have a professional draft the deed.
almost 5 years ago
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Partner A and Partner B started a partnership with equal working capital in January 2014. Then Partner B could not bring more funds and Partner A had to step in and contributed 95% of the capital by 2017. Partner A was sleeping partner (not mentioned in deed, just understood). However, Partner A found that the firm was making profits which were not being disclosed by Partner B. So Partner A decided to withdraw from the firm and Partner B agreed to return the working capital and bring in another partner. Questions:
1) Partner A is completely unaware of how the firm was being run. He had given Power of Attorney to Partner B to conduct the business. So what are the safeguards he needs to specify in the retirement deed so that he will not be liable for anything in the future? 2) The partnership deed contained the following clause - "firm shall pay interest @ 12% per annum, to the partners on the amount of capital contribution or loans advanced by each of them respectively and the profits or losses of the business of the firm shall be arrived at after accounting for the interest so payable as a business expenditure of the firm". The deed does not specify whether the interest payable is simple interest or compound interest. Is there any legal precedent or stipulation which can clarify this so that partner A can claim the correct amount? Thank You
-
Wazzeer Professional Network
ProfessionalFollowing safeguard needs to be specified in retirement deed:-
- Date of the retirement from the partnership
- Compensation paid on the retirement by partnership firm.
- Liabilities of the departing and continuing partners clearly defined
- New shareholding partner
- Relinquishment by the retiring partner of any property owned by the partnership business;
- Power of attorney and undertaking by retiring partner
- Dispute resolution
- Declarations of the retiring partner
- Confidentiality and Intellectual Property Rights
- No dues of retiring partner
- Debt will be paid by the continuing partners
- Undertaking that he will not use the name of the Firm
- Change of partnership in bank account
- No part in decision making after retirement.
The interest paid by the firm to the partner should be as per section 40 (b) of partnership act which says that the interest to the partner cannot pay more than 12% simple interest per annum. So if in partnership it is not specified also then we will consider as per partnership act.
‘Get a Wazzeer’ to have a professional draft the deed.
almost 5 years ago
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