What is Agreement Admitting a Minor To The Benefit Of Partnership?
Does this Contract require to be Printed on Stamp Paper and be Notarized?
In the world of business and entrepreneurship, partnerships have always been one of the most popular form of collaborations, enjoying many legal priviledges. Partnerships allow individuals to pool their resources, skills, and efforts to achieve common goals and share the risks and rewards. However, what happens when a partner passes away, leaving behind a minor as their heir? How can the interests of the deceased partner and the minor be protected while ensuring the continuity of the partnership? To address such situations, an agreement admitting a minor to the benefit of partnership is usually executed. In this article, we will delve into the details of this agreement and its significance in maintaining business continuity and safeguarding the interests of all parties involved.
According to the Partnership Act, 1932 a minor can be admitted as a partner in a partnership firm with the consent of all the partners in the agreement where the minor will share only the profits or gains of the firm and will have no share in the firm's loss.
In a nutshell, the Agreement Admitting a Minor to the Benefit of Partnership establishes a fair and amicable resolution to the distribution of assets and profits following the unfortunate demise of Mr. D. By admitting minor Y to the benefits of the partnership and providing for his future prospects as a potential partner, the parties involved have demonstrated their commitment to securing his interests.
Furthermore, the readjustment of the partners' profit shares ensures a balanced and equitable distribution of profits and losses among the existing partners.
The major provisions covered in this agreement include:
Yes, for its legal validity, this contract must be printed on stamp paper as required by the Stam laws of the state in which this contract is executed. Notorization is optional but advisable.
After the agreement is signed, it is essential for the involved parties to comply with the registration requirements under the Partnership Act and the Income Tax Act to ensure its legal validity.
The applicable laws in this contract are the Partnership Act and the Income Tax Act of India. Compliance with these laws is necessary to enforce the agreement's terms and protect the interests of all parties involved.
This agreement, dated the ____ day of ____, is
entered into between Mr. ABC, Mrs. XYZ, and Mr. PQR as the First, Second,
and Third Part, respectively, and Mrs. EFQ, acting for herself and as the
natural guardian of her minor son, Y, as the Fourth Part.
The First, Second, and Third Parties have been engaged in a partnership
business, along with Mr. D, based on the partnership deed executed on ____.
Tragically, Mr. D passed away on ____, leaving his widow, Mrs. DEF, and a
minor son, Y, as his legal heirs.
Following Mr. D's demise, Mrs. DEF claimed her share in the assets of the
partnership, including goodwill and undistributed profits. The parties
involved have resolved this claim amicably, agreeing to pay Mrs. DEF a sum
of Rupees ____ as full payment for the share of the deceased partner, Mr. D.
This sum includes goodwill and capital assets of the partnership.
Furthermore, the agreement states that Y will be admitted to the benefits of
the partnership, and he will receive a share of 5% in the net profits of the
firm.
Prior to the execution of this agreement, an amount of ____ has been paid to X. This payment was made partly in cash and partly in securities, such as units of the Unit Trust, purchased jointly in the name of Mrs. DEFand the minor Y. This measure is taken to safeguard Y's interests. Mrs. DEF acknowledges the full receipt of this amount and declares that she, as Y's natural guardian, holds no further claims against the firm regarding Mr. D's share.
As per this agreement, minor Y is granted admission to the benefits of the partnership, entitling him to a 5% share in the net profits. Importantly, he will not bear any liability for the losses incurred by the firm.
The First, Second, and Third Parties agree to pay Y's share of the net profits within three months from the end of the accounting year. Additionally, the agreement outlines the readjustment of the partners' shares in the profits of the firm, which will be as follows:
The agreement anticipates that when Y reaches the age of 18, he will be considered for admission as a partner in the firm, provided the partnership continues until then. The terms of his admission as a partner will be agreed upon by all existing partners and the legal representative of the late Mr. D.
Subject to the provisions mentioned above, the First, Second, and Third Parties intend to continue carrying on their business as a partnership, in accordance with the terms outlined in the original partnership deed.
To ensure legal validity, all amendments made by this agreement to the partnership's constitution and terms will be duly registered as required by the Partnership Act, 1932 and the Income Tax Act, 1961 within the prescribed timeframes.
In witness whereof, the involved parties have affixed their signatures on this ____ day of ____.
| Mr. ABC: | Mrs. XYZ: |
| Signature: | Signature: |
| Date: | Date: |
| Mr. PRQ: | Mr. DEF: |
| Signature: | Signature: |
| Date: | Date: |
| Witness Name: |
| Signature: |
| Date: |
| Witness Name: |
| Signature: |
| Date: |
