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Partnership Business a form of business organisation created through voluntary agreements of minimum two and maximum 20 persons (the maximum is 10 in the case of banking business), with the intention of making and sharing profits among themselves. A partnership can arise only as a result of an agreement or contract, expressed or implied, between the partners. In Bangladesh, a partnership firm is to be formed under the provisions of the Partnership Act 1932. A person of unsound mind is not eligible to become a partner. A minor is also not eligible to become of partner in a firm. However, if all the partners agree, a minor may only be admitted to the benefits of an already existing partnership. In that case he is not personally liable, nor is his separate property for the debts of the firm, although his share in the partnership property and profits will so be liable. By definition, a partnership is illegal if it consists of more than 20 persons in case of a general business and more than 10 persons in case of business in banking. A partnership becomes illegal if its object is prohibited by law, or is immoral, or opposed to public interest. A non-profit making association is not a partnership in law of Bangladesh. In general, institutions or associations cannot be a member of a partnership. The partnership law in Bangladesh recognises two types of partnership: the general partnership, and limited partnership. In a general partnership, all the partners or any of them on behalf of all, participate actively in the operations of the business and share all the responsibilities including unlimited liability. The general partnership is again divided into voluntary partnership and specified/special partnership. A partnership is called voluntary if the partnership deed does not specifically contain the duration of the partnership business. On the other hand, if a partnership firm is established for a specific period and to achieve certain objective, the partnership would be called specific. If such partnership continues to work after the expiry of the stipulated time or after the achievement of the specific objective, the partnership automatically converts into a voluntary partnership business. The Partnership Act 1932 does not require a partnership deed or agreement to be registered. The registration of such firm is optional. But if registered, a partnership firm can enjoy some legal rights and facilities. A partnership deed includes the name of the firm, nature of business, the capital and property of the firm, the capital of individual partners, term of partnership, provision for salaries, and drawings on account of profit, rate of interest (if any) on partners' capital, advances and drawings, rights and duties of individual partners, provision for accounts and audit, division of profits and losses (capital and revenue), powers of admission and expulsion of a partner, termination of agreement by insolvency, death, etc., valuation of goodwill and share of assets on sale or death, and an arbitration clause. If a partnership business is not registered, a partner of the firm can not bring a suit to enforce a right arising from a contract or conferred by the Partnership Act against the firm or his co-partners. Also, an unregistered firm can not file a suit, or take other legal proceedings, to enforce a right from a contract, or to claim a set-off in any suit filed against it. However, the non-registration of a firm does not affect the right of an unregistered firm to bring a suit to enforce a right arising otherwise than out of a contract and the power of an official assignee or receiver to realise the property of an insolvent partner.
The partnership business plays a dominant role in the
trade sector in Bangladesh. As on 30 June 2000, the total number of partnership
firms registered in Bangladesh under the Partnership Act 1932 was 32,726,
while the total number of joint stock companies registered under the companies
act 1994 was 44,524 (public 2,556 and private 41,970 including
462 foreign). No statistics are available on the general partnership firms
(non-registered). A large number of partnership firms both general and
registered became ineffective or liquidated due to non-compliance of conditions
of contract, appropriation of funds, distrust, and other malpractice by
the partners. [Abul Kalam Azad] |
