ID: BC070400635 Solution: Assignment no.

1 (Spring 2008)
Q.1: What are the different kinds of partnership? Explain limited
partnership and its features. Ans: There are three different kinds of partnership, 1. Partnership at Will 2. Particular Partnership 3. Limited Partnership

Limited Partnership:
In limited partnership liabilities of some partners are limited up to the amount of their capitals. In limited partnership at least one partner has unlimited liability. When the composition of the firm is changing, limited partnerships are required to file documents with the relevant state registration office. Limited partnerships must also disclose their status when dealing with other parties. Limited partnership is not introduced in Pakistan so far. Limited Partnership is similar to general partnership; expect that in addition to one or more general partners, there are one or more limited partners.

Main Features:
Main features of limited partnership are: Limited Partner: At least one partner has limited liability in this kind of partnership. Unlimited Partner: At least one partner must has unlimited liability in limited partnership. Number of Partners: Number of partners ranges from 2 to 20 in an ordinary business and not more than 10 in banking business. Registration: The registration of limited partnership is compulsory by law. Inspection of Books: In limited partnership, limited partner has a right to inspect the books of accounts. Rights of suggestions: In limited partnership, limited partner also has the right to give suggestions to others who manage the business. Participation in Management: Limited partner cannot take part in the management of the business.

Transferability of shares: Limited partner can transfer his shares to any other person with the consent of all other partners. Admission of New Partner: New partners can be admitted without the consent of limited partners but with the consent of unlimited partners. Separate legislation: It is enrolled under the limited Partnership Act, 1907, instead of Partnership Act, 1932. Withdrawal of Capital: A limited partner cannot withdraw his capital until he remains in Limited Partnership business. Notice for Termination: Each partner has a right to terminate the partnership by giving notice to other partnership. Termination on Death: Partnership is terminated on the death of a partner.

Q.2: List down the modes of dissolution of a firm? Ans: According to Section 39 of partnership Act, 1932,
The dissolution of partnership between all the partners of a firm is called dissolution of a firm. The dissolution of a firm means a firm ceases to exist. Dissolution of firm means complete breakdown or extinction of partnership between all the partners of a firm. The whole firm is dissolved and partnership is terminated as well. Dissolution of partnership does not end a partnership firm. If the partners have agreed that the death or retirement of a partner would not dissolve the firm, then on the death or retirement of a partner, partnership would come to an end, although the firm ma continue with the same name. According to Indian Partnership Act, 1932 partnership can be dissolved by any of the following modes. 1. Dissolution by Agreement (Sec: 40) 2. Compulsory Dissolution (Sec: 41) 3. On the happening of certain contingencies (Sec: 42) 4. Dissolution by Notice (Sec: 43) 5. Dissolution by the court (Sec: 44) 1. Dissolution by Agreement: A firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners.

2. Compulsory Dissolution: Compulsory dissolution of a firm happens due to following reasons: By the adjudication of all the partners but one as insolvent. By the happening of an event which makes it unlawful for the business of the firm to be carried on or for the partners to carry it on in partnership. Where more than one separate adventure or undertaking is carried on by the firm the illegality of one or more shall not of itself cause the dissolution of the firm in respect of its lawful adventures and undertakings. 3. On the happening of certain contingencies: Subject to contract between the partners of a firm is dissolved: If constituted for a fixed term, by the expiry of that term. If constituted to carryout one or more adventures or undertakings, by the completion thereof. By the death of a partner. By the adjudication of a partner as an insolvent. 4. Dissolution by notice: If the partnership is a t will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm. The firm is dissolved as from the date mentioned in the notice as the date of dissolution or if no date is mentioned, then as from the date of the communication of the notice. 5. Dissolution by Court: The court may dissolve the firm on any of the following grounds: If a partner has become of unsound mind, in which case the suit may be brought as well by the next friend of the partner who has become of unsound mind as by any other partner. If a partner, other than the partner suing has become in any way permanently incapable of performing his duties as partner. If a partner, other than the partner suing is guilty of conduct which is likely to affect prejudicially the carrying on of the business, regard being had to the nature of the business. If a partner, other than the partner suing, willfully or persistently commits breach of agreements relating to the management of the affairs of the firm or the conduct of its business. If the business of the firm cannot be carried on save at a loss. On any other ground which renders it just and equitable that the firm should be dissolved