BBA

1. T Y P E S O F PA RT N E R S H I P F I R M
A presentation on

2. INTRODUCTION
 There are several types of partnership firms. On
the basis of liability, time limit, type of business,
and registration criteria, there are mainly four
types of partnership firms.

3. Types of partnership firm
 LIMITED LIABILITY PARTNERSHIP FIRM:- In this
partnership, liability of partners is limited, like joint stock
company. ‘ unlimited liability is a major drawback of
partnership firm. However, Liability of anyone partner
must be unlimited.
 This type of partnership encourages people to start
partnership without fear of unlimited liability.
 UNLIMITED LIABILITY PARTNERSHIP FIRM:- In
this type of partnership firm, the liability is
unlimited for all the partners. If the debt exceeds the
assets of the firm. The partners are held liable to pay
the debt, even by selling personal properties.

4. Based on time limit
 PARTNETSHIP AT WILL :- The life span of partnership
depends upon wish or will of the partners. The firm exists as long
as unity continue. If any partner wishes to dissolve the firm, the
partnership is terminated.
 TERM PARTNERSHIP FIRM:-This partnership firm last for
a specific period. This partnership firm is created for specific
time period. Such partnership firm is terminable at the expiry of
the period. The time limit is mentioned in the partnership deed.
 PARTNERSHIP FOR A SPECIFIC PURPOSE:- Sometimes, a
partnership is established for a specific purpose. After
completion of specific purpose, the partnership is terminated.
 For ex. If the partnership is established for the construction of
bridge, at the completion of project, Partnership is terminated.

5. Based on types of business
 PARTNERSHIP FIRM FOR BANKING BUSINESS:-
This type of partnership firm is created to carry out
banking business. i.e., To accept deposits from the
public and lend money to the customers.
 PARNTERSHIP FIRM FOR GENERAL BUSINESS:-
This type of partnership firm is created for non-
banking business. It works like general business
firm.

6. Based on registration
 Registered partnership firm:- A registered partnership
firm is registered with the registrar under the
partnership Act, 1932.
 Registration of partnership firm is not compulsory, but it
is desirable to get the firm registered. A registered firm
can enjoy certain benefits over the unregistered firm.
 Unregistered partnership firm:- An unregistered firm not
registered with the registrar. The unregistered firm faces
several problems while recovering the debt from the
third party. It is advisable to get the partnership firm
registered.

7. LIMITED LIABILITY PARTNERSHIP
 INTRODUCTION:- LLP is a partnership in which some or
majority of partners have limited liability.
 Term limited liability indicates that the person is liable up
to his investment in the business; his personal property is
not attached with in case of extraordinary loss/debts.
 It, therefore exhibits elements of both partnership and
corporate form of business organisation.
 Many countries like America, Britain, Canada, China,
Germany,Greece, Japan have felt need to recognize LLPs.
 Gradually, this type of partnership firm become popular in
other part of the world, including India.
 LLP type of business set-up was allowed only after 2008.

8. DEFINITIONS OF LLP
 LLP is a partnership in which some majority
partners have limited liability. It incorporates
elements of partnership and corporate form. In LLP,
the partners with limited liability are not responsible
or liable for debt of the firm.
 LLP is a special type of hybrid form of business
organisation, in which except at least one general
partner, the rest of partners have limited liability. An
LLP is formed under Limited liability partnership
act,2008.

9. FEATURES
 Special type of business organization:- The concept of
LLP has emerged recently in India. An LLP is a special type
of hybrid form of business organisation, which offers
distinct benefits over other forms of business organisation.
In an LLP , except at least one general partner, the other
partners continue to have limited liability, similar to that of
shareholders of public limited company.
 The purpose of LLP :- The purpose of LLP was to
remove a major drawback of unlimited liability in the
partnership firm. Due to unlimited liabilities, even capable
and competent people hesitate to establish partnership
firm. This is the facility to start a partnership venture
without worrying for unlimited liabilities.

10.  Separate legal entity:- As per the limited liability
partnership act 2008, an LLP is treated as a separate legal
entity. Being a legal person an LLP can sue or can be sued
on its own name; partners are not liable for dues against
the LLP.
 The act applicable:- A LLP partnership firm is
registered under the LLP act 2008. The first LLP was
incorporated in the first week of April 2009. At present
there are more than 10,000 LLPs formed and registered
under the LLP act. The provisions of partnership act 1932,
are not applicable to an LLP.

11.  Type of partners:- A limited liability has two types of
members general members and special members. There
must be at least one general partner with unlimited
liability. The special partners only contribute to capital and
share in the profit. They can inspect books and give advice,
but they do not have right to take active part in the
management of the firm’s business.

12.  Important provision:-Important provision of the LLP
act,2008, are
 Every LLP shall use the word Limited Liability Partnership
or acronym LLP as the last word of its name.
 In a LLP, there should be at least two partners, one of them
should be resident of India.
 At least one general partner shall have unlimited liability.
 An LLP can not be dissolved easily, the procedure tends to
be lengthy, difficult and expensive.

13. Advantages
 Partners have limited liability except one.
 It has long life span as compared to ordinary partnership,
such partnership is not terminated by death, lunacy or
insolvency of a limited liability partners.
 Due to limited liability, an LLP can attract a huge capital
investment.
 It is more flexible and less complicated as compared to the
company.
 Registration procedure of LLP is simple and easy.
 It is a legal person, An LLP can sue or can be sued on its
own name.

14. Registration of partnership
 The formation of the partnership firm mainly requires at least two
persons who want to join hands in doing business and agree on sharing
of profits and losses. Normally, partnership formation may consist of
two steps:
 Preparation of Partnership Deed
 Registration of the Firm

15. Partnership deed
 Partnership Deed is a written agreement, containing
necessary provisions relating to the partnership firm.
 Partnership deed is also called as ‘Partnership Agreement’
or ‘Articles of Partnership.’
 The Partnership Act, 1932, defines certain rights and duties
of partners. But, they come into force if the agreement is
not prepared.
 In order to avoid unnecessary problems and conflicts, it is
advisable to discuss mutual rights, powers, and obligations
and should be incorporated in written agreement.

16.  An expert advocate can help drafting the agreement. It contains
the terms and conditions relating to partnership and the
regulations for the internal management of the firm.
 The contents of the deed are decided by manual consent of all the
partners.
 The partnership deed may be in oral or written. But, oral
agreement is not act as legal evidence. Thus, it is advisable to
have a written agreement.
 The deed should be duly signed by partners and registered with
the Registrar. After registration, the partnership deed acts as a
legal evidence and ready reference to settle any
dispute s emerges in the future.

17. Points or clauses covered in the Deed
 Nature and Duration of Business: This clause specified
two things – purpose or objectives to start the partnership
firm and the time period (fixed time) when the firm may be
dissolved.
 Capital Contribution: This clause mentions the detail
about contribution to the capital of the partnership firm.
Share capital contribution may not be of equal proportion.
 Distribution of Profits: Normally, every partner is entitled
to get an equal share in the profits. But, the agreement may
provide an unequal share of the profits as per the capital
contribution or other criteria. Thus, the clause specifies ratio
of profit distribution among the partners. It is also mentioned
how the losses, if any, will be distributed among partners.

18.  Management Rights: Every partner can have the equal rights in the
management. But, the agreement provides unequal rights. It specifies
the management powers of its partners. Mostly, the active partners
have more rights in management than the sleeping partners.
 Other Clauses: Besides above clauses, there are a few others, which
are the part of the partnership deed. They include:
 Provisions in case of death, insolvency and retirement of a partner
 Provision for arbitration (settlement of disputes)
 Provisions relating to conversion of partnership into limited company
or any other form.
 Provisions relating to drawings from the firm and remuneration to the
partners
 Any other provisions that partners think necessary to be added in the
Agreement.

19. Registration of partnership firm
 1. Fill up Registration Application form: for registration of
partnership firm, a registered application form is provided. The form is
called ‘Form-1’. It contains necessary points with blank space; the
partners have to fill up the detailed and submitted to the registrar. The
form contains the following points.
 Name and address of the firm.
 Name of the place where business is carried on.
 Detail regarding capital of the investors.
 Name, address and contact number of all the partners.
 Duration of the firm if any.
2. Put date and Signature: The form shall be duly dated and signed by
all the partners.

20.  Attach the attachments: The attachment includes certified copy of
partnership agreement, Identity cards and address proofs of all the
partners, Proof of the ownership of the place of the business or rental
agreement etc.
 Submit an Application form: At last, an Application form and
attachments there with to be submitted to the registrar and necessary
fees are to be paid.
 The registrar verifies the form and attachments. If the registrar is
satisfied with the procedure, he registers an entry of the firm in the
register and issue a certificate of registration.