What are the rules in the absence of a partnership deed?
Are you looking for the rules and provisions in the absence of partnership as given in class 12 Accountancy CBSE Board? I have summed up all rules if there is only verbal agreement among partners.
Provisions applicable in the absence of Partnership Deed
In the absence of a partnership Deed or if the partnership Deed is silent on a certain point. following Provisions of the Indian Partnership Act 1932 would apply.
1. Profit Sharing Ratio:- Profits and Losses are to be shared equally irrespective of their capital contribution.
2. Interest on Capital:- No interest on capital is allowed to the partners.
3. Interest on Drawings:- No Interest is to be charged on drawings.
4. Remuneration to a Partner:- No partner is entitled to any salary and commission for taking an active part in day-to-day business affairs.
5. Interest on Loan of Partner:- On any loan given by the partner to the firm. Interest @6% p.a. would be allowed even if there are losses to the firm.
6. Admission of a partner:- To admit a new partner all existing partners’ consent is mandatory.
7. Interest on Loan to Partner by Firm:- No Interest is charged on any loan given by the firm to the partner.
Important Provisions of the Indian Partnership Act, 1932
|i)||If all the partners agree, a minor may be admitted for the benefit of partnership.||[Sec – 30]|
|2)||A person may be admitted as a partner either with the consent of all the existing partners or in accordance with an agreement among the partners.||[Sec – 31]|
|3)||A partner may retire from the firm either with the consent of all the other partners or in accordance with an agreement among the partners||[Sec – 32]|
|4)||Unless otherwise agreed by the partners in the Partnership Deed, a firm is dissolved on the death of a partner.||[Sec – 69]|
|5)||Unless othewise agreed by the partners in the Partnership Deed, a firm is dissolved on the death of a partner.||[Sec – 35]|