REPORT ON A FAILIAR

PARTNERSHIP FIR
Faculty of Business Studies
University of Dhaka

Department of International Business

Course Code: EIB 502(Legal and Regulatory Environment of Business )

TERM PAPER
Prepared by
Anjumanara Haque
ID: 801414072
BATCH: EIB 14TH
Prepared For
Professor (DR) Khondoker Bazlul Hoque
Faculty of Business Studies
University of Dhaka

Date of Submission: 14th December, 2014

Acknowledgement
Here is the term paper on A Partnership Firm in Bangladesh, which you have assigned us in
order to get a clear understanding over Partnership Act in local companies. We have tried our
best to gather all kinds of relevant information, which could give us an overall concept of this
topic. We have gather partnership information about EMEM Systems Limited and we also
read several articles and journals on the topic for preparing this term paper. We hope that it will
meet our expected standard.
We would like to acknowledge the support of EMEM Systems Limiteds employees for giving
us all information about writing this report.
We have enjoyed preparing the report very much. Especially, the given class lecture on this
course helped us a lot and made the hard work easier. We are submitting this term paper for your
kind consideration and thanking you for your constant assistance and guidance.

Sincerely yours,
Anjumanara Haque ID# 801414072
Afroza Khanom ID# 801415019
EMBA IB, University of Dhaka.

Table of content
Background of the report
Objectives of the report
Limitation of the Report
Main body
Chapter I form a partnership
Partnership Agreement
Registration procedure of a partnership business
Nature of partnership
Partners of this business
Duties of Partners
Profit and loss sharing between partners
Chapter II property
The property of the Firm
Application of the property of the firm
Personal profits earned by the firm
Chapter III Duties and rights
Rights and Duties of partners
Rights and Duties of partners after a change in the firm
Partners to be agent of the firm
Chapter IV Authority
Implied authority of partners as agent of the firm
Extension and restriction of partners implied authority
Partners authority in an emergency
Chapter V Dissolution
Procedure related to dissolution of a firm
Conclusion
Recommendations
Appendices
References

1. Introduction
Communication is important at every stage of a partnership, and especially so at the
outset. A common mistake business partners make is jumping into business before
really getting to know each other. Everyone should be able to connect to feel
comfortable expressing their opinions, ideas and expectations.
Business partners often start businesses together with little planning and few ground
rules. Sooner or later, they discover the hard way that whats left unsaid or unplanned
often leads to unmet expectations, anger and frustration. Partners can clash over
countless things, including conflicting work ethics and financial goals, roles in the
business and leadership styles.
A note about partnering with a spouse: Working together puts an added strain on a
relationship, and couples can quickly discover there is a little too much togetherness.
Those who succeed often have learned to set boundaries keep the business from
dominating every aspect of their lives.
Once the decision is made to start a business together, they should create a partnership
agreement with help from a lawyer and an accountant. Take this step no matter who
are partner. People with strong personal connections may feel certain that their
supposedly unbreakable bond will help them overcome any obstacles along the way.
Big mistake. Get a written agreement.
Every agreement should address three crucial areas: compensation, exit clauses, and
roles and responsibilities. Include who owns what percentage of the business, who is
investing what, where the money is coming from, and how and when partners will be
paid.
Typically partners set up equal ownership and each contributes 50% of the initial
investment. But terms can vary greatly. For instance, one partner might contribute
more money if the other partner can bring in expertise or business contacts. As the
business grows and changes, adjust compensation accordingly. For example, partners
may agree to work initially without compensation, and to get paid after a certain
revenue target is reached. In addition, if the business partnership brings on more
people or if a particular partner is putting in more or less time, building some
flexibility into the contract can let you adjust payments.
The agreement should also cover how you plan to exit the business. Include clauses
that spell out cases in which one partner is obliged to buy out the others interest

for instance, if one wants to quit the business. For instance, it can state that the other
partner must buy him or her out for a prenegotiated percentage of the businesss value.
If neither partner wants to continue the business, partners can also liquidate and divide
all assets. Its also a good idea to settle on in advance how to assess the total value of
the business upon dissolution. The agreement should specify who appraises the
business and the methodology to use.
Outline your expectations for how youll operate your business. Clearly delineate the
roles and responsibilities of the partners based on their skills and desires. This will
eliminate turf wars and clearly show employees to whom they should report.
Establish routines for daily communication. For example, agree to talk twice a day at
designated times and to re-evaluate their goals on a regular basis. At least once a
quarter, sit down and discuss how you envision the future of the business and what
steps to take in getting there.
Addressing these issues up front will help you better focus on your business later.
How you work out the details of setting up a partnership could be an indicator of how
well or poorly your prospective venture will operate. Inevitably, some potential
partners will realize through the process they werent meant to be.
1.1 Methodology
The research is primarily based on review of secondary data collated from reports, publications
and seminar proceedings. A qualitative analysis has been carried out based on these data.
Relevant tables and graphs have also been used to further augment the analysis.
1.2 Report Background
As a coursework of the course titled by International Business in MBA Program, we are assigned
to do a report on the topic of A Familiar Partnership Firm in Bangladesh.
1.3 Scope of the study
The study tried to show the partnership situation and partnership firm in Bangladesh. The
purpose of this study is to see how the Partnership Act 1932 affect Bangladeshis Partnership
Firm. Understanding what is the purpose of the partnership, nature of partnership, duties

of partners, profit and loss sharing, property of the firm, rights and implied authority
of partners, partners authority in an emergency and the procedure related to
dissolution of a firm.
1.4 Objectives of the study:
I. To analyze the current status of partnership business in Bangladesh.

II. To find out the suitable partnership policy for attracting individuals to form partnership
business.
III. To identify Determinants of influencing partnership potential for business.
IV. To provide some recommendations for partnership firm.

1.5 Limitation of the Report:

This study will focus on Partnership Form rather than partnership Dissolution for creating a
partnership firm. Below, try to formulate the research problem as follow:

What guidelines should be followed if one partner wants to leave the

partnership?
On what grounds can a partner be expelled from the partnership (misconduct,
non-performance of duties)?
How will new partners be admitted to the partnership?
What happens if a partner is incapacitated or dies?
What methods will be used to settle disputes that can't be otherwise resolved?
Policy Relevance
Qualitative analysis will give a better policy recommendation to promote partnership
Firm through information for its proper development.
History:
Law of Partnership is contained in the Partnership Act, 1932 which came into force on 1 st October
1932. It extends to the whole of Pakistan (Sec.3)

Partnership Definition:
A Partnership is a Voluntary association of two or persons, who contribute,
money, Property, time, care or skills, to carry on, as co-owners, a lawful
business for profits and to share the profits and losses of the business
Partnership is defined as a relation between two or more persons who have
agreed to share the profits of a business carried on by all of them or any of

them acting for all. The owners of a partnership business are individually
known as the "partners" and collectively as a "firm".

Main features of Partnership Act:

A partnership is easy to form as no cumbersome legal formalities are involved. Its registration is
also not essential. However, if the firm is not registered, it will be deprived of certain legal
benefits. The Registrar of Firms is responsible for registering partnership firms.
The minimum number of partners must be two, while the maximum number can be 10 in case of
banking business and 20 in all other types of business.
The firm has no separate legal existence of its own i.e., the firm and the partners are one and the
same in the eyes of law.
In the absence of any agreement to the contrary, all partners have a right to participate in the
activities of the business.
Ownership of property usually carries with it the right of management. Every partner, therefore,
has a right to share in the management of the business firm.
Liability of the partners is unlimited. Legally, the partners are said to be jointly and severally
liable for the liabilities of the firm. This means that if the assets and property of the firm is
insufficient to meet the debts of the firm, the creditors can recover their loans from the personal
property of the individual partners.
Restrictions are there on the transfer of interest i.e. none of the partners can transfer his interest
in the firm to any person (except to the existing partners) without the unanimous consent of all
other partners.
The firm has a limited span of life i.e. legally, the firm must be dissolved on the retirement,
lunacy, bankruptcy, or death of any partner.
A partnership is formed by an agreement, which may be either written or oral. When the written
agreement is duly stamped and registered, it is known as "Partnership Deed". Ordinarily, the
rights, duties and liabilities of partners are laid down in the deed. But in the case where the deed
does not specify the rights and obligations, the provisions of the THE INDIAN PARTNERSHIP
ACT, 1932 will apply.
Content of Partnership Deed:
1. Name and address of a firm.
2. Nature of the business to be carried out.
3. Date of commencement of partnership.
4. Names, description and address of the partners.
5. The town and the place where business will be carried on.
6. The amount of capital to be contributed by each partner.
7. Ratio in which profits or losses are to be shared by a partner.

8. Loans and advances by partners and the interest payable on them.

9. The amount of drawings by each partner and the rate of interest allowed thereon.
10. Duties and powers of each partner.
11. Any other terms and conditions to run the business.
Partnership is an appropriate form of ownership for medium sized business involving limited
capital. This may include small scale industries, wholesale and retail trade; small service
concerns like transport agencies, real estate brokers; professional firms like charted accountants,
doctors' clinic, attorney or law firms etc.
Characteristics:
1. Legal Entity: A partnership has no separate legal entity apart from its members.The firm and
the partner are not separate from one another.
2. Agreement: A partnership is the result of an agreement b/w persons.An agreement may be
written or oral.
3. Number of Partners: There must be at least two persons to form a partnership. The
maximum limit to the number of partners is 20.
4. Existence of Business: The partners must agree to carry on a business
5. Sharing of Profit: The agreement b/w the parties must be to share the profits of a business.
Distribution of Profit will be among the partners according to their agreement
6. Unlimited Liability: The liability of all the partners is unlimited in case of firms debt.
7. Capital: The Capital of the firm is supplied by all the partners. In some cases not necessary to
contribute the capital by all the partners.
8. Good Faith: A Partnership business is based on mutual confidence and trust of the partners.
9. Management: Every Partner can take part in the conduct and management of the business of
the firm.
10. Control: Control is depend on the terms of the firms. All partners take an active part in the
conduct of the business.
11. Transfer of Interest: Shares cannot be transfer to outsider without the consensus of all the
partners
12. Duration: Partnership continues at the will of the partners.
Kinds of Partners
1. Active Partners: Who takes active part in the management.
2. Sleeping Partners: Who not take active part in the management.
3. Nominal Partner: Who lends his name and reputation to the firm.
4. Senior Partner: Who has a more investment in the firm and receive more profit
5. Junior Partner: Opposite to the senior partner. Young person and recently join the
partnership
6. Partner in Profit only : Who share the profits of the firm but not liable for losses
7. Secret Partner: Whose membership is kept secret from outsiders.
8. Minor Partner: A person who has not competed 18 year of age.
Types of Partnership
1.Partnership-at-will
2. Particular Partnership
3. Limited Partnership
20. Types of Partnership

1. Partnership-at-will:
Where no provision is made in the agreement regarding the duration of the partnership.Any
partner can terminate it any time by giving the notice.For unlimited period.Formed for particular
project
2. Particular Partnership:
When partnership is formed to do a particular business or for a particular period.For example:
partnership for work on the production of film
3. Limited Partnership:
Formed in Act 1907of England. In Pakistan there is no limited partnership.Following are the
features in Limited Partnership:
I.
One or more partners are with limited liability
II.

At least one Partner with unlimited liability

III.

The firm must be registered

IV.

Limited partners can inspect the books of the firm at any time

V.

Limited partner cannot take active part in the management

Chapter I
Form a partnership

Partnership Agreement
THIS PARTNERSHIP AGREEMENT is made this ____1st______ day of
____January_______, 20_01_, by and between the following groups:
M.M. Ispahani Group

Address: House#3 (3rd Floor) ,

Road # 7, Block #F, Banani
City/State/ZIP:Dhaka-1213

Trade Services International

(TSI)

Address: House#3 (4th Floor) ,

Road # 7, Block #F, Banani
City/State/ZIP:Dhaka-1213

1. Nature of Business. The partners listed above hereby agree that they
shall be considered partners in business for the following purpose:
IT Service Provider, IP Telephony Services, Equipment and Solutions, Call Center
Solution, ADSL Internet Service, Software Development, Data Network Services and
Solutions, Network Design and Implementation.
2. Name. The partnership shall be conducted under the name of _____
EMEM Systems Limited ___________ and shall maintain offices at Address:
House#3 (6th Floor) , Road # 7, Block #F, Banani , City/State/ZIP:Dhaka1213.
3. Day-To-Day Operation. The partners shall provide their full-time services
and best efforts on behalf of the partnership. No partner shall receive a
salary for services rendered to the partnership. Each partner shall have
equal rights to manage and control the partnership and its business. Should
there be differences between the partners concerning ordinary business
matters, a decision shall be made by unanimous vote. It is understood that
the partners may elect one of the partners to conduct the day-to-day
business of the partnership; however, no partner shall be able to bind the
partnership by act or contract to any liability exceeding
_TK._10000000_______ without the prior written consent of each partner.
4. Capital Contribution. The capital contribution of each partner to the
partnership shall consist of the following property, services, or cash which
each partner agrees to contribute:
Name Of
Partner
M.M. Ispahani
Group
Trade Services
International
(TSI)

Capital
Contribution
2000000

Agreed-Upon
Cash
5000000

% Share

1000000

3000000

30%

70%

The partnership shall maintain a capital account record for each partner;
should any partners capital account fall below the agreed to amount, then
that partner shall (1) have his share of partnership profits then due and
payable applied instead to his capital account; and (2) pay any deficiency to
the partnership if his share of partnership profits is not yet due and payable

or, if it is, his share is insufficient to cancel the deficiency.

5. Profits and Losses. The profits and losses of the partnership shall be
divided by the partners according to a mutually agreeable schedule and at
the end of each calendar year according to the proportions listed above.
6. Term/Termination. The term of this Agreement shall be for a period of
_25___ years, unless the partners mutually agree in writing to a shorter
period. Should the partnership be terminated by unanimous vote, the assets
and cash of the partnership shall be used to pay all creditors, with the
remaining amounts to be distributed to the partners according to their
proportionate share.
7. Disputes. This Partnership Agreement shall be governed by the laws of
the State of ___Bangladesh____. Any disputes arising between the partners
as a result of this Agreement shall be settled by arbitration in accordance
with the rules of the American Arbitration Association and judgment upon the
award rendered may be entered in any court having jurisdiction thereof.
8. Withdrawal/Death of Partner. In the event a partner withdraws or retires from the
partnership for any reason, including death, the remaining partners may continue to operate the
partnership using the same name. A withdrawing partner shall be obligated to give sixty (60)
days prior written notice of his/her intention to withdraw or retire and shall be obligated to sell
his/her interest in the partnership. No partner shall transfer interest in the partnership to any other
party without the written consent of the remaining partner(s). The remaining partner(s) shall pay
the withdrawing or retiring partner, or to the legal representative of the deceased or disabled
partner, the value of his interest in the partnership, or (a) the sum of his capital account, (b) any
unpaid loans due him, (c) his proportionate share of accrued net profits remaining undistributed
in his capital account, and (d) his interest in any prior agreed appreciation in the value of the
partnership property over its book value. No value for good will shall be included in
determining the value of the partners interest.
9. Non-Compete Agreement. A partner who retires or withdraws from the partnership shall not
directly or indirectly engage in a business which is or which would be competitive with the
existing or then anticipated business of the partnership for a period of ____1 Year________, in
those _____IT_ Sector__ of this State where the partnership is currently doing or planning to do
business.
IN WITNESS WHEREOF, the partners have duly executed this Agreement on the day and year
set forth hereinabove.
_______________________
Partner

_______________________
Partner

2.2 Registration procedure of a partnership business

Registration of a partnership firms means entering of a firms name in the Register of Firm kept
with the Registrar. It is not obligatory. It is optional. EMEM Systems Limited is a registered
company under The Partnership Act.

Advantages of Registered company

1. Ease of formation
2. Greater capital and credit resources
3. Better judgement and more managerial abilities
Disadvantages of Registered company
1. Absence of ultimate authority
2. Liability for the actions of other partners
3. Limited life
4. Unlimited liability

Nature of partnership
The Nature of EMEM Systems Limited is Partnership At- Will. Because there is no
provision is made by contract between the partners for the duration of their partnership.

Partners of this business

EMEM Systems Limited was founded in 2001 as a partnership firm of two very reputed
enterprise of Bangladesh, namely M.M. Ispahani Group and Trade Services International (TSI),
to make a difference in the ICT industry of Bangladesh.
Both M.M Ispahani and TSI have a long reputation in Bangladesh, operating in different
business sectors. Where inception of business by M.M Ispahani dates back to 1820 and emerged
as one of the most successful business enterprise. It is involved in the venture of tea, textile,
poultry, jute, shipping, travel, foods, ISP, etc playing a major role in the economy of Bangladesh.
While TSI formed in 1984 rapidly emerged as an influential company taking part in the Power
and Fertilizer sector of Bangladesh earning experience in prestigious projects like Kaptai Hydroelectric power plant, Chittagong Urea Fertilizer Company, etc. TSI have been working as the
local Associate of Mitsubishi Heavy Industries (MHI) Limited for their ongoing contracts with
Jamuna Fertilizer Company Limited (JFCL), Zia Fertilizer Company Limited (ZFCL) and Urea
Fertilizer Company limited (UFFL). TSI also represent TOTAL Oil of France as their nation
Distribution for their entire range of Lubricating Oils and Solvent.

With the experience of two very successful enterprises in Bangladesh in its back and a high level
of professional experience EMEM SYSTEM LTD is confident to make its mark in the industry.

Duties of Partners
Partners are bound to carry on the business of the firm to the greatest common advantage,
to be just and faithful to each other, and to render true accounts and full information of all
things affecting the firm to any partner or his legal representative.

Profit and loss sharing between partners

The profits and losses of the partnership shall be divided by the partners
according to a mutually agreeable schedule and at the end of each calendar
year according to the proportions of percentage of share.

Chapter II
Property
The property of the Firm
Subject to contract between the partners, the property of the firm includes all property
and rights and interest in property originally brought into the stock of the firm, or
acquired, by the purchase or other-wise, by or for the firm, or for the purposes and in
course of the business of the firm and includes also the goodwill of the business.
Unless the contrary intention appears, property and rights and interests in property
acquired with money belonging to the firm are deemed to have been acquired for the
firm.

EMEM system accrued its own office building, all office equipment and capital of
Tk.200000000

Application of the property of the firm

Subject to contract between the partners, the property of the firm shall be held and used by the
partners exclusively for the purposes of the business.

Personal profits earned by the firm

Partners of EMEM Systems Limited have follow this Law regarding this specific issue.
Subject to contract between the partners,(a) If a partner derives any profits for him from any transaction of the firm, or from the use
of the property or business connection of the firm or the firm name, he shall account for
that profit and pay it to the firm;

(b)

If a partner carries on any business of the same nature as and competing with that
of the firm, he shall account for and pay to the firm all profits made by him in that
business.