Feisal Naqvi

Limited Partnership (Amendment) Act

In Uncategorized on December 18, 2012 at 7:59 am

Partnership Act (Amendment) Bill 20[**]

A

Bill

to amend the Partnership Act, 1932

WHEREAS it is desirable and expedient to amend the Partnership Act, 1932, in order to provide for the formation of limited partnerships and for matters connected therewith or ancillary thereto.

It is hereby enacted as follows:

1.       Short title, extent and commencement. (1) This Act may be called the Limited Partnership (Amendment) Act, 2011.

(2)      It extends to the whole of [NAME OF PROVINCE].

(3)      It shall, unless otherwise provided, come into force at once.

2.       Amendments to the Partnership Act, 1932.—In the Partnership Act, 1932 the following further amendments shall be made, namely:-

 (1)      in section 58, —

 (a)     in sub-section (1), in clause (e), the word “and” after the comma shall be omitted;

 (b)      in sub-section (1), in clause (f), for the fullstop at the end, a comma shall be substituted, the word “and” shall be inserted, and thereafter the following new clause shall  be inserted, namely:-

                “(g)    in the case of a limited partnership:

(i)              that the partnership is limited,

(ii)            the full names, description and permanent addresses of every  limited partner;

(iii)          the sum(s) contributed by each limited partner, and whether paid in cash or in some other form;

(iv)          the general nature of its business; and

(v)            the term, if any, for which the partnership is entered into, and the date of its commencement.”

2.       Addition of a new chapter in the Partnership Act, 1932. In the Partnership Act, 1932 a new Chapter, namely Chapter VII-A shall be incorporated after Chapter VII containing sections 71A to 71M, namely:-

                                                    “Chapter VII-A

 Limited partnerships

 71A.  Definitions. For the purposes of this Chapter, unless the context otherwise requires:

(a)      “general partner” means a partner who is liable for all debts and obligations of the firm.

(b)        “limited partner” means a partner who

(i)         at the time of entering into the partnership contributes thereto a sum or sums as capital or property valued at a stated amount; and

(ii)        who is not liable for the debts or obligations of the firm beyond the amount so contributed.

(c)      “limited partnership” means a partnership consisting of not more than fifty (50) persons including at least at least one or more general partner(s) and one or more limited partner(s).

71B.   Constitution of limited partnership.- (1) Limited partnerships may be formed in the manner and subject to the conditions provided by this Chapter.

(2)      A limited partner shall not during the continuance of the partnership, either directly or indirectly, draw out or receive back any part of his contribution, and if he does so draw out or receive back any such part, he shall be liable for the debts and obligations of the firm up to the amount so drawn out or received back.

(3)      The return on contribution and any other sums or allowances payable to a limited partner in addition or in lieu of such return shall be subject to contract between the partners.

(4)      A body corporate may be a limited partner.

71C.   Registration of limited partnership.- (1) Every limited partnership shall file a statement with the Registrar in accordance with the provisions of this Act.

(2)      In the event of failure to register, in addition to the consequences enumerated in section 69 of the Act, the limited partnership shall be deemed to be a general partnership, and every limited partner shall be deemed to be a general partner.

71D.   Name of the firm.- (1) Every limited partnership shall state the firm name with the words ‘Limited Partnership’ or ‘LP’ as the last words of the name.

(2) Every limited partnership shall mention the firm name as provided in sub-section (1) in legible characters in all its documents, including but not limited to the letterhead, correspondence, notices, invoices, cheques,  advertisements and other publications of the firm.

71E. Contributions of limited partners.- Subject to contract between the partners, a limited partner may, during the continuance of the limited partnership, with the prior written approval of all the general partners —

(a) increase or reduce the amount of his contribution; and

(b) draw out or receive the amount of his contribution, or part thereof.

71F.   Modifications of general law in case of limited partnerships.- (1) A limited partner shall not take part in the management of the partnership business, and shall have no power to bind the firm:

Provided that a limited partner may, either himself or through his agent, at any time inspect the books of the firm and examine the state and prospects of the partnership business, and may advise with the partners thereon.

(2)      A limited partnership shall not be dissolved by the death or bankruptcy of a limited partner.

(3)      Lunacy of a limited partner shall not be a ground for dissolution of the partnership by a court unless the lunatic’s share cannot be otherwise ascertained and realised.

(4)      Where there are no general partners in the limited partnership, the partnership shall stand dissolved.

(5)      In the event of the dissolution of a limited partnership its affairs shall be wound up by the general partners unless the Court otherwise orders.

(6)      Subject to any agreement, express or implied, between the partners:–

(a)      any difference arising as to ordinary matters connected with the partnership business may be decided by a majority of the general partners.

(b)      a limited partner may, with the prior written consent of the majority of the general partners, assign his share in the partnership, and upon such assignment the assignee shall become a limited partner with all the rights and liabilities of the assignor.

(c)      The other partners shall not be entitled to dissolve the partnership by reason of any limited partner suffering his share to be charged for his separate debt.

(d)      Any person may be inducted as a partner without the consent of the existing limited partners.

(e)      A limited partner shall not be entitled to dissolve the partnership by notice.

71G.   Registration of changes in partnership.- (1) If during the continuance of a limited partnership any change is made or occurs in

(a) the firm name;

(b) the general nature of the business;

(c) the principal place of business;

(d) the partners or the name of any partner;

(e) the term or character of the partnership;

(f) the sum contributed by any limited partner;

(g) the liability of any partner by reason of his becoming a limited instead of a general partner or a general instead of a limited partner;

a statement specifying the nature of the change shall be sent to the Registrar within seven days of such change in the manner provided in section 60.

(2) If any default is made in compliance with sub-section (1) each of the general partners shall be punishable with imprisonment which may extend to three months or with fine, or with both.

71H.   Advertisement of statement of general partner becoming a limited partner and of assignment of share of limited partner.- Notice of any arrangement or transaction under which any person will cease to be a general partner in any firm, and will become a limited partner in that firm, or under which the share of a limited partner in a firm will be assigned to any person, shall be forthwith advertised in the manner provided in section 72, and until notice of the arrangement or transaction is so advertised, the arrangement or transaction shall be deemed to be of no effect.

71I.    Penalty for furnishing false particulars.- Any person who signs any statement, amending statement, notice or intimation under this Chapter containing any particular which he knows to be false or does not believe to be true, or containing particulars which he knows to be incomplete or does not believe to be complete, shall be punishable with imprisonment which may extend to three months or with fine, or with both.

71J.    Registrar to file statement and issue certificate of registration.– (1) On receiving any statement made in pursuance of this Chapter the Registrar shall cause the same to be filed, and he shall send by post to the firm from whom such statement shall have been received a certificate of the registration thereof.

(2)      The certificate of registration will be conclusive evidence of the facts stated therein and shall be effective as of the date shown on the certificate.

(3)      A limited partnership shall be deemed to have been formed on the date mentioned in the certificate of registration issued by the Registrar upon the statement filed by the limited partnership under section 71C.

71K.  Register to be kept.- The Registrar shall keep, in proper books to be provided for the purpose, a register of all the limited partnerships registered as aforesaid, and of all the statements registered in relation to such partnerships.

71L. Third parties dealing with limited partnerships.- If a third party had previously dealt with a general partnership which then becomes a limited partnership, he is entitled to treat the firm as a general partnership until he has notice of its registration; furthermore, he is entitled to treat any partner of the firm as a general partner of the limited partnership until he has notice that the partner is a limited partner.

(2) Similarly, if a person deals with a limited partnership after a particular general partner has become a limited partner, he is entitled to treat that partner as a general partner until he has notice that the partner is a limited partner.

 71M.  Overriding effect of this Chapter.- Except as provided otherwise in this Chapter, the provisions of this Act applicable to partnerships shall also apply to limited partnerships. In case of any inconsistency, the provisions of this Chapter shall have overriding effect.”

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  1. Wish all op-eds had similar follow-up writeups!

    Should this act come into force, is there a way to assess what the impact would be in terms of banking regulations and SMEDA/similar orgs role?

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