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Profit sharing ratio of partners

988 views 1 replies

Sumit Rajput

Article

115 Points Posted on 07 July 2015

Please solve my problem.

There are two persons, want to create partnership deed.Person A wants to contribute huge amount as capital & person B will not contibute anything.Person A wants only high interest on capital & person B wants 100% of profit after the payment of interest of capital to A.Both partners are agreed upon this.

So, my question is : can we create a partnership in which agreed profit sharing ratio between two partners A & B is 0 : 100. Remember one thing both partners are agreed upon this. they have not any problem. Is partnership possible in such a case ?

Replies (1)

CA Bhargav Nathwani

CA in Practice

8307 Points Posted on 07 July 2015

Not possible as per partnership act,1932...as per my memory ..no partnership can be establish without sharing profit & loss..

You should draft provision in partnership deed like Mr A will receive profit of Rs 100 or etc negligible amount so that we can satisfied requirement of both the parties. Remeber, if you will not provide this provision in partnership deed then autometically P & L ratio will applicable as to distribute equally.