My sister and I own a gold loan firm with many branches in a 50% partnership, left to us by our father legally, and which has been in operation for the last 2 years since he died. If I plan to dissolve the partnership and leave the business, cos I am unable to manage it and do not have an interest to pursue it (leaving the country for higher education/career), am I entitled to half of all profits made in the last 2 years, as well as half of the gold/monetary value of total gold deposited in all branches of the firm (assets), when I leave, or am I only entitled to half of all profits made in the last 2 years alone?
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Dear Sir,
As per law, you are entitled for 50% of all the assets/profits/loss as per law. There should be just audit of all the things/assets till the date of your leaving. Since the gold deposited with you might be required to be returned after repayment of loan, hence just audit is must.
Half of profit only and not gold deposited.
And in loan business, equivalent sum to gold price is maintain in company account. So 50% profit you can withdraw while maintaining the reserve.
Rest depend on partnership deed, what you are entitle to on resignation from firm.
On dissolution of a partnership or upon retirement, a partner is entitled to a valuation of his share in the net assets of the partnership which remain after meeting the debts and liabilities.
For these shares that you will get after you leave the firm, you need to go through the bylaws of the firm.
Yes, the assets and liabilities has to be shared equally or in the way stated in the agreement.
1. AS a Legal Heir apparent of the Partner, and as a Partner, EACH partner is entitled to EQUAL share in all the Assets & Liabilities of the Firm, without any exceptions.
2. IF one partner resigns /retires /dies, THEN the Firm gets dissolved and Firm's assets & liabilities should be distributed EQUALLY and duly informed to the Registrar of Firms.
The terms and conditions of the Partnership Firm (PSF) are basis for settling the same.
In your case, on resigning PSF, the net value of the Assets & Liabilities has to be take in to consideration with regard to share among both of you i.e., 50% each.
Both of you are entitled / eligible for 50% share in each of the PSF i.e., all Assets & Liabilities.
Yes you are liable to equal division rights, assets and liabilities, profits/ losses of the firm
1. You are entitled to half assets, half property and half property. You will get half of the amount of total valuation of firm including all assets,property and deposits.
1. You are entitled to the assets and properties including profits of the firm.
2. The gold deposited with you are not your property. Those gold items are pledged with you for taking loan which shall have to be returned to the borrowers when they repay the loan.
thanks for all the very helpful responses. I understand that I am entitled to 50% of the assets of the firm. The existing gold in the lockers of our firm was pledged by borrowers while taking loans from our firm (paid by our firm to borrowers through an overdraft loan taken in the name of the firm from a bank). Does that mean in addition to profits made, I am entitled to half of the value of the gold in the lockers also, if I were to leave the firm?
You re not entitled to half the value of gold in the lockers
2) these are pledged by borrowers who can redeem them on payment of money advanced against gold
1. Yes, that is the capital invested in your fiirm to run the business.
2. You are entitled to 50% moveable and immovable assets of your firm.
3. You should get your accounts audited by an auditor to arrive at the amount to be claimed by you inn place of calculating your share by yourself.
Gold belongs to borrowers. Only only defaulted borrowers gold.
- As per law, a partner can leave a firm with the consent of other partners or as agreed in the agreement, and further , a partner leaving a firm is entitled to receive the amount of capital contributed by the partner and his or her right to share in the accumulated profits after deducting the accumulated losses, if any.
- Further, profits or losses, made by a firm should be divided among its partners in accordance with the provision of their Partnership Deed. However, if there is no written or oral agreement among the partners, the Law prescribes that profits and losses should be shared equally by the partners.
- Further, the Supreme Court in the matter of Purushottam v. Shivraj Fine Arts Litho Works (2007 )15 SCC 58 , held that once any asset or money becomes part of the capital of the partnership, a partner has no exclusive right over any portion nor can he seek to recover the same from the persons in their individual capacity. It is entirely owned by the firm and the partners in their individual capacity do not owe capital contribution to the other partners.
- However, if you dissolve the partnership , then the balance of the Realization Account is to be transferred to Partners' Capital Accounts in their profit-sharing ratio, and if the ratio is not mentioned in the partnership deed , then profits or losses arising from Realization Account are to be distributed in equal proportion between the partners.
- Since, you and your sister are only partners in the partnership , hence upon leaving by you, the partnership will be automatically dissolved , and then the equally sharing of claim of deceased fathers assets & capital will also arise.
- Hence, you are liable to get half share of the firm assets as well.
Including profits made
See you are entitled to share of gold also, the assets and liabilities shall be calculated and you shall be given your share.
No, that gold is not the asset of the firm. That gold is still the property of persons who took loans..
Being a partner of the company, you are entitled to receive profits as well as your share in the business on retirement from the partnership firm.
If a partner withdraws from a firm by dissolving it, then it is a dissolution and not retirement of a partner. The retirement of a partner from a firm does not dissolve it.
A retired partner continues to be liable to the third party for acts of the firm till such time that he or other members of the firm give a public notice of his retirement.
The retired partner, however, continues to be liable for acts of the firm done before such retirement of a partner. This liability holds good unless there is an agreement between him, the concerned third party, and partners of the reconstituted firm. Such an agreement can also be implied by the course of dealings between the third party and the reconstituted firm post announcement of the retirement of a partner.
According to Section 37, of the Partnership Law, if a member of the firm dies or otherwise ceases to be a partner of the firm, and the remaining partners carry on the business without any final settlement of accounts between them and the outgoing partner, then the outgoing partner or his estate is entitled to share of the profits made by the firm since he ceased to be a partner.
The share may be attributable to the use of his share of the property of the firm or the interest at six percent per annum on the amount of his share in the property.
The surviving partners also have an option of purchasing the interest of the deceased or outgoing partner. If the surviving partners choose to purchase the interest, then the outgoing partner is not entitled to any further share in profits of the firm.
Dear Sir,
You are entitled for the same as well.
It is rather impossible to provide you with the most appropriate answer without going through your partnership deed.
1. You are entitled to valuation of your share in the net assets of partnership which remain after deducting debts and liabilities.
2. By no stretch of the imagination you are entitled to half of the value of gold in the lockers as these are pledged by borrowers at the time of taking loans from the partnership firm. This gold has to be returned to borrowers once they repay the loan. Once the borrowers repay the loan, the firm is obliged to give back the exact gold pieces to the borrowers. The firm keeps the gold with it and holds it as security for the tenure of the loan.
You are not entitled to half of value of Gold lying in the Locker.
The same is pledged by the borrower for raising the loan, he / she can repay the borrowed loan and on such repayment of loan amount, the Gold has to be returned.
It is better you take the help of a qualified Chartered Accountant, to quantify profits and allocate the same to both of you, to avoid confusion and have clarity.
Ans: you are entitled to the 50% share in the property. yes you are also entitled to the gold in the locker to the 50% extent of your share in the partnership.
1. Yes you are entitled to get your share profits of last 2 years.
2. You can get half share form assets only if you are ready to take 50% liabilities of the firm.
Clauses of the partnership to be read closely to come to an conclusion.
50% partnership agreement means that you have half the share in everything ie profits and losses. Assets and liabilities. The partnership would get dissolved once you leave the partnership as there are only two partners.
The gold belongs to the people who took loan. Now you can take a lump sum amount from your sister and leave the partnership. Calculate the assets the firm owns now and based upon it calculate the profit accrued by it based upon today's financial status.