Partnerships - free information
A partnership is an arrangement between two or more persons carrying on business with a view to profit. Partnerships can be loose arrangements or the terms can be in a written agreement known as a Deed.
Regardless of whether a written agreement exists, if the arrangement is clearly a partnership then the actions, powers and rights of each partner are controlled by the Partnership Act 1890.
There are certain rights of partners protected under this Act and they include:
1. All partners are entitled to share equally in the capital and profits of the business and will be liable to contribute equally to any losses sustained by the business.
2. The partners are entitled to be indemnified (reimbursed) by the business for any personal liability suffered by the partner in carrying out the ordinary and proper conduct of the business or in anything done necessary to preserve the business.
3. A partner making an advance to the partnership over and above the amount of capital which he agreed to subscribe, is entitled to interest at the rate of 5% per annum on those sums from the date of advance. A partner is not entitled to interest on the capital subscribed by him before the profits have been determined.
4. Every partner can take part in the management of the business.
5. No partner is automatically entitled to be paid for acting in the partnership business.
6. No new partners can join the partnership without the consent of all the existing partners.
7. No change can be made to the nature of the partnership business without the consent of all the existing partners (ordinary matters connected with the business can however be decided by majority vote).
8. The partnership books are to be kept at the principal place of business of the partnership and every partner may have access to them and inspect or copy them.
9. If no fixed period has been agreed for the partnership to run then any partner can bring the partnership to an end on giving notice to all the other partners.