Rights and Responsibilities of Partners in a Partnership Firm
A partnership is a relation between two or more persons admits to sharing the business’s profit and loss run by one or more person acting for all.
The persons who have entered into the partnership are only known as ‘Partners’.
After registering the partnership firm, when a partner enters, they should make an agreement among partners, which is called a partnership deed. That includes the roles and responsibilities of the partner among other partners. (e.g.) profit/loss sharing, salary, interest on capital, admission of a new partner, etc.
Subject to the partnership deed registered between the partners, the provisions of the Indian Partnership Act, 1932 also define certain general rights and partners’ responsibilities.
Rights of the partners:
Taking part in the conduct of the business
Each partner has a right to take part in the conduct of the business.
Each partner has the right to express their opinion before making a critical conclusion.
Sharing the profits as well as loss. If the ratio of profit/loss didn’t mention in the partnership deed, then the partners should make an equal share.
Accessing the books of accounts.
Each partner has the right to review, access and take a copy of the book of accounts.
Right to object to the admission of a new partner
Each partner has the right to prevent the entry of a new partner.
Right to dissolve the firm.
A partner of the partnership firm has the right to dissolve the partnership with all the other partners’ consent.
Responsibilities of partners:
To be faithful to other partners.
Maintaining a transparent and healthy relationship among other partners.
All the partners of a partnership firm should pay the liable equally for the firm.
Rendering real accounts and full information.
Every partner must provide real and full information about the firm’s account.
Covering up for any loss caused by the fraud.
If one of the partners is suspected to be fraud, then the fraudulent partner is bound to compensate the firm or the partners for the loss.
Being accountable for any personal profits earned by the partners.
If a partner earns profit from any of the firm’s stream or uses the firm name, the partner must pay it to the firm.