Types & Kinds of Partners
Table of Contents
Kinds or Types of Partners
There are multiple types of partners in a partnership. Partner is a partial owner (Percentage as per share or Agreement) of business, who run the business and liable for the acts of business. objective of all kinds of partners are same that is to earn a profit.
Partners types can be described in 4 major categories, these are as mention below.
- By Age
- By Liability
- By Activity
- Effecting on Partnership
Age wise Types of partners
- Major/Adult Partner : All those partners who are not minor. By law all partners should be major. But in some circumstance a minor can be partner with the consent of other partners.
- Minor partner are those who are not Major / Adult as per country law. Usually it is 18 years. But varry from country to country constitution.
Liability wise kind of partners
- Limited Liability: In this type, partner have limited liability towards the business loss up to the shared capital or agreed as per partnership deed.
- Unlimited liability: As per law all partners are liable to pay the debts of business, even their personal property need to be sold for clearing and paying the debts.
Types of Partners by Activity involvement
- Active partner is a general partner. Who participate in routine work of the business, Also called working partner. He is person who have some special expertise over other partners, that is why have vital role. He may be hired worker with the consent of other partners to look after the business. He get salary as well as have share of profit and loss as per ratio defined in agreement.
- Dormant/Sleeping Partner, These kinds of partners does not participate in the routine business affairs. Usually they invest and get the share of profit. However their liability are as like of general partner.
- Nominal / Quasi Partner, These are not partner by law. They lend their name to the business for its success and get charges for the use of their name. They do not invest any capital into the business.
- Estoppel partner Or Holding Out, If a person (who is not partner of partnership) who by act or by words indicate or show that he is partner of the firm but in fact he is not, will be liable for such conduct or transaction being made on the basis of his word or act.
- Partner in Profit Only, This kind of partner only get the profit and or not face the loss of the firm.
Types of Partners Who Effect on Partnership deed
- New Partner, Whenever a new partner need to add, a new partnership come into existence, which replace the old one.
- Retired Partner, At the retirement of a partner old will be dissolved and new will be made.
- Insolvent Partner, at the insolvency of partner, his share is given to the relevant person as per law. Then new partnership made with new terms and condition and share of profit and loss.
- Deceased Partner. At the death of partner, new partnership deed created.