Partnership Firm

Minor As a Partner under the Partnership Act, 1932

A partnership is a form of business where two or more people share ownership and the responsibility for managing the partnership firm and also shares the income or losses their business generates. When a person fulfills all the requirements to enter into a partnership agreement to gain the profits of a firm is known as a partner.  According to the Partnership Act, 1932 a minor can enjoy all the benefits as a partner by signing the partnership agreement.

Now let’s discuss our article in detail.

What are the Eligibility Criteria for Minor to become a Partner?

The eligibility criteria are such as:

• A person should have Indian nationality.
• A person should not attain the age of majority.
• He or she should be of sound mind at the time of making a contract.
• He or she should not be disqualified to make a contract by any law.
• He or she should fulfill the requirements to be a partner.

What are the Essentials for a Minor to become a Partner in a Firm?

Here are the essentials such as:

• Consent of all the partners: A minor can become a partner after gaining the consent of all the existing partners of the firm.
• There must be a specific business: There should be an existing business where there is a vacancy of the partner. A minor cannot form a business by himself or by herself.

What are the Rights of a Minor as a Partner?

The rights of a minor are as follows:

• Right to be a partner: A minor partner on attaining the majority has the right to become a partner of the firm. A minor after gaining the age of the majority then after six months he or she has the right to execute his or her partnership in a firm or not to continue his or her partnership.
• Right to share the profits: When a firm gets the profit then there is an equal division of all the profits to the partners.
• Right to access to books of account: A minor has the right to inspect the books of account under the Partnership Act.
• Not liable for any loss: A minor partner will have the rights to his or her share of profitsof the firm, but the minor partner is not liable for any losses beyond his or her interest in the firm. So a minor partner’s assets cannot be liquidated to pay the firms liabilities.
• When attaining the age of majority: At any time within six months of his or her obtaining knowledge that he or she had been admitting to the benefits of the partnership whichever the date is. Such a person may give public notice that he or she has elected to become or he or she has elected not to become a partner in the firm. Such notice shall determine his or her position as regards to the firm which also provided that if he or she fails to give such notice then he or she shall become a partner in the firm on the expiry of the six months.
• Providing the fact that he or she is not minor: Where any person has been admitted as a minor to the benefits of partnership in a firm, the burden of providing the fact that such person had no knowledge of such admission until a particular date after the expiry of the six months of his or her attains the age of majority that shall lie on the person asserting that fact.
• When a minor becomes a partner: His or her rights and liabilities as a minor continue up to the date on which he or she becomes a partner but he or she also becomes personally liable to the third party. The minor’s share in the property and the profits shall be the share to which he or she was entitled to be minor.
• When a minor elects to become a partner: Then his or her rights and liabilities continue to a minor up to the date on which he gives public notice. His or her share shall not be liable for any acts of the firms. He or she shall be entitled to sue the partners for his or her share of the property and the profits.

What are the Liabilities of the Minor as a Partner?

Now let us take a look at the liabilities of the minor as a partner:

• When minor elects not to become a partner: After turning 18, the minor partner can choose to become the partner of the firm or not to become the partner of the firm.If minor chooses not to become the partner then the minor has to give the notice.
• Insolvency of the minor’s share: When their insolvency of the minor’s share then the minor will not be liable for any loss.
• Liable to the third party: The Minor partner can choose to be a partner where he or she will be liable to all third parties for the acts done by any the partners since he or she admit to the benefits of the partnership deed.
• Liabilities will be same when the minor attains majority: If he or she becomes a full-time partner, he or she will be treated as a regular partner and have all liabilities of the one. His or her share in the profits and the property of the firm will remain the same as it was when he or she was a minor partner.

What happens when a Minor Attains the age of Majority?

Within six months of his or her attaining the age of majority, he or she has to give notice regarding below:

• Whether he or she wishes to continue as a partner in the partnership firm.
• In case he or she does not make an announcement after gaining the age of majority, he or she will be treated as a full-fledged partner.
• Additionally, when he or she chooses to become a partner or is deemed to be a partner, his or her liability becomes unlimited with effect from the date of his or her announcement. In the case where announcement has not been done, after the expiry of the 6 months as explained above.

Conclusion

The minor as a partner can enjoy all the benefits of the partnership by fulfilling all the requirements of an agreement. The minor enjoys the various rights and also fulfills the duty as a partner. According to the Partnership Act^[1], 1932 the firm can’t be built with a minor as the only partner of the partnership firm.

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