Why is it important for all partners in a partnership to be on the same page in regard to the method used? What happens, if they cannot agree?
Answers
When two or more persons join hands to set up a business and share its profits and losses it is called Partnership. Section 4 of the Indian Partnership Act 1932 defines partnership as the ‘relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all’.
Partners are the persons who have entered into partnership individually with one another. Partners collectively are called ‘firm’. The essential features of the partnership are as follows.
Two or More Persons
There should be at least two persons coming together to form the partnership for a common goal. In other words, the minimum number of partners in a partnership firm can be two.
Indian Partnership Act, 1932 has put no limitations on maximum numbers of partners in a firm. But however, Indian Companies Act, 2013 puts a limit on a number of the partners in a firm as follow:
For Banking Business, Partners must be less than or equal to 10.
For Any Other Business, Partners must be less than or equal to 20.
If the number of partners exceeds the limits, the partnership becomes illegal.