Partnership
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225991171
2008-07-16T10:25:14Z
Epbr123
1395162
Reverted edits by [[Special:Contributions/121.223.47.93|121.223.47.93]] to last version by Dweller (using [[WP:HG|Huggle]])
:''For partnership in cricket terminology, see [[List_of_cricket_terms#P|List of cricket terms]]''
{{BusinessLaw}}
A '''partnership''' is a type of [[business entity]] in which '''partners''' (owners) share with each other the profits or losses of the business undertaking in which all have invested. Partnerships are often favored over [[corporation]]s for taxation purposes, as the partnership structure does not generally incur a tax on profits before it is distributed to the partners (i.e. there is no [[dividend tax]] levied). However, depending on the partnership structure and the [[jurisdiction]] in which it operates, owners of a partnership may be exposed to greater personal liability than they would as [[shareholder]]s of a corporation.
==Definition in Civil Law==
:''For a country-by-country listing of types of partnerships, companies, etc., see [[Types of business entity]].''
In [[Civil law (legal system)|civil law systems]], a partnership is a nominate [[contract]] between individuals who, in a spirit of cooperation, agree to carry on an enterprise; contribute to it by combining property, knowledge or activities; and share its profit. Partners may have a [[partnership agreement]], or declaration of partnership and in some [[jurisdiction]]s such [[agreement]]s may be registered and available for public inspection. In many countries, a partnership is also considered to be a legal [[entity]], although different legal systems reach different conclusions on this point. A partnership can be formed by two or more people.
===Germany===
{{Main|Kommanditgesellschaft}}
Partnerships may be formed .. in the legal forms of [[General Partnership]] ([[Offene Handelsgesellschaft]], OHG) or [[Limited Partnership]] (Kommanditgesellschaft, KG). A partnership can be formed by 2 or more people.
In the OHG, all partners are fully liable for the partnership's debts, whereas in the KG there are general partners with unlimited liability and limited partners whose liability is restricted to their fixed contributions to the partnership. Although a partnership itself is not a legal entity, it may acquire rights and incur liabilities, acquire title to real estate and sue or be sued.
===China===
{{Main|Partnership (China)}}
In mainland China, the a partnership enterprise encompasses general partnerships and limited liability partnerships.<ref>Partnership Enterprise Law, Chapter 1, article2</ref> A general partnership comprises general partners who bear joint and several liabilities for the debts of the partnership enterprise.<ref>Partnership Enterprise Law, Chapter 1, article2</ref> A limited liability partnership enterprise includes general partners and limited partners where the limited partners are liable only to the extent of their capital contributions.<ref>Partnership Enterprise Law, Chapter 1, article2</ref>
===Japan===
The Japanese civil code provides for partnerships by contract, which are commonly known as {{nihongo|''nin'i kumiai''|任意組合}} or "voluntary partnerships." A more recent statute has allowed for the creation of [[limited liability partnership]]s.
One form of partnership unique to Japan is the [[tokumei kumiai]] or "anonymous partnership," in which partners have limited liability so long as they remain anonymous in their capacity as partners and do not participate in the operation of the partnership. Japanese corporate law also provides for partnership-like [[corporation]]s called [[mochibun kaisha]].
==Common Law==
Under [[common law]] legal systems, the basic form of partnership is a [[general partnership]], in which all partners manage the business and are personally liable for its debts. Two other forms which have developed in most countries are the [[limited partnership]] (LP), in which certain "limited partners" relinquish their ability to manage the business in exchange for [[limited liability]] for the partnership's debts, and the [[limited liability partnership]] (LLP), in which all partners have some degree of limited liability.
There are two types of partners. General partners have an obligation of [[strict liability]] to third parties injured by the Partnership. General partners may have [[joint liability]] or [[joint and several liability]] depending upon circumstances. The liability of limited partners is limited to their investment in the partnership.
A silent partner is one who still shares in the profits and losses of the business, but who is uninvolved in its management, and/or whose association with the business is not publicly known.
===Hong Kong===
:{{Main|Partnership (Hong Kong)}}
A partnership in Hong Kong is a business entity formed by the [http://www.hklii.org/hk/legis/en/ord/38/ Hong Kong Partnerships Ordinance], which defines a partnership as "the relation between persons carrying on a business in common with a view of profit" and is not a joint stock company or an incorporated company.<ref>[http://www.hklii.org/hk/legis/en/ord/38/s3.html Hong Kong Partnerships Ordinance, Chapter 38, section 3]</ref> If the business entity registers with the Registrar of Companies it takes the form of a limited partnership defined in the [http://www.hklii.org/hk/legis/en/ord/37/ Limited Partnerships Ordinance.]<ref>[http://www.hklii.org/hk/legis/en/ord/37/s4.html Hong Kong Limited Partnerships Ordinance, Chapter 37, section 4]</ref> However, if this business entity fails to register with the Registrar of Companies, then it becomes a general partnership as a default.<ref>[http://www.hklii.org/hk/legis/en/ord/37/s4.html Hong Kong Limited Partnerships Ordinance, Chapter 37, section 4]</ref>
===Australia===
:{{main|Partnership (Australia)}}
Summarising s. 5 of the ''[[Partnership Act 1958]]'' (Vic) (hereinafter the 'Act'), for a partnership in Australia to exist, four main criteria must be satisfied. They are:
* Valid Agreement between the parties;
* To carry on a business - this is defined in s.3 as 'any trade, occupation or profession';
* In Common - meaning there must be some mutuality of rights, interests and obligations;
* View to Profit - thus charitable organizations cannot be partnerships (charities are typically incorporated associations under ''Associations Incorporations Act 1981'' (Vic))
===United Kingdom limited partnership===
:{{main|Partnership (UK)}}
A limited partnership in the United Kingdom consists of:
*one or more persons called general partners, who are liable for all debts and obligations of the firm; and
*one or more persons called limited partners, who contribute a sum/sums of money as capital, or property valued at a stated amount. Limited partners are not liable for the debts and obligations of the firm beyond the amount contributed.
Limited partners may not:
*draw out or receive back any part of their contributions to the partnership during its lifetime; or
*take part in the management of the business or have power to bind the firm.
If they do, they become liable for all the debts and obligations of the firm up to the amount drawn out or received back or incurred while taking part in the management, as the case may be.
===India===
According to section 4 of the Indian Partnership Act of 1932, "Partnership is defined as the relation between two or more persons who have agreed to share the profits of business run by all or any one of them acting for all". This definition superseded the previous definition given in section 239 of Indian Contract Act 1872 as - “Partnership is the relation which subsists between persons who have agreed to combine their property, labour, skill in some business, and to share the profits thereof between them”. The 1932 definition added the concept of mutual agency.
===USA===
{{Main|Partnership (USA)}}
{{Main|Partnership taxation (USA)}}
The federal government of the United States does not have specific statutory law governing the establishment of partnerships. Instead, the several composite states of the country each contain their own statutory and common law governance of partnerships. These states largely follow general common law principles of partnerships whether a [[general partnership]], a [[limited partnership]] or a [[limited liability partnership]]. In the absence of applicable federal law, the [[National Conference of Commissioners on Uniform State Laws]] has issued non-binding models laws (called uniform act) in which to encourage the adoption of uniformity of partnership law into the states by their respective legislatures. This includes the [[Uniform Partnership Act]] and the [[Uniform Limited Partnership Act]]. Although the federal government does not have specific statutory law for establishing partnerships, it has an extensive and hyperdetailed statutory scheme for the [[Partnership taxation (USA)|taxation of partnerships]] in the [[Internal Revenue Code]]. The IRC is Title 26 of the United States Code wherein Subchapter K of Chapter 1 creates tax consequences of such great scale and scope that it effective serves as a federal statutory scheme for governing partnerships.
==Islamic Law==
{{main|Qirad}}
The ''[[Qirad]]'' and ''Mudaraba'' institutions in [[Sharia|Islamic law]] and [[Islamic economic jurisprudence|economic jurisprudence]] were the precursors to the modern [[limited partnership]]. These were developed in the [[Islamic Golden Age|medieval Islamic world]], when [[Islamic economics in the world|Islamic economics]] flourished and when early [[Trading company|trading companies]], [[big business]]es, [[contract]]s, [[bills of exchange]] and long-distance [[international trade]] were established.<ref name=Banaji>Jairus Banaji (2007), "Islam, the Mediterranean and the rise of capitalism", ''[[Historical Materialism (journal)|Historical Materialism]]'' '''15''' (1): 47–74, [[Brill Publishers]].</ref>
In medieval [[Italy]], the ''Qirad'' and ''Mudaraba'' concepts were adapted in the 10th century as the ''commenda'',<ref name=Banaji/> a limited partnership instiution which was generally used for financing maritime trade.
==Notes==
{{reflist}}
==See also==
*[[Business partnering]]
*[[General partnership]]
*[[Limited partnership]]
*[[Limited liability partnership]] (LLP)
*[[Equity partner]]
*[[Partnering]]
*[[Partnership taxation]]
*[[Partnership accounting]]
*[[Strategic Alliance]]
*[[Corporation]]
*[[Types of business entity]]
[[Category:Business law| ]]
[[Category:Types of companies]]
[[Category:Partnerships]]
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