- 20 Marks
BCL – L1 – Q65 – Partnership dissolution
Question
SUNDRY ISSUES
(a) What may account for the Registrar refusing to register a partnership agreement?
(b) State three modes of winding up of a firm and indicate who can initiate each.
(c) State how assets of a partnership are applied after winding up.
(d) State briefly the nature of a partner’s liability.
Answer
(a) What may account for the Registrar refusing to register a partnership agreement includes:
- Partnership not registrable under the Act.
- Name of the firm is misleading or undesirable.
- Incomplete, illegible, inaccurate, irregular statement or the statement is on paper insufficiently durable to be suitable for registration.
- Unlawful partnership business/object.
- A partner is an infant, insane, guilty of fraud or dishonesty within the past five years (whether convicted or not in connection with any trade or business), or an undischarged bankrupt.
(b) Modes of winding up of a firm include:
| Mode | Initiator(s) |
|---|---|
| Under the order of a court | Any partner, the Registrar, or any former partner or his legal representative who has not been paid his partnership interest amount. |
| Voluntary liquidation by the partners | By agreement of the partners. |
| Insolvency proceedings under the Insolvency Act 153 against all the partners’ jointly | One or more of the firm’s creditors. |
(c)
- Payments of debts and liabilities to third parties (non-partners).
- Advances from partners.
- Payment of capital.
- Distribution of the residual in profit sharing proportion.
(d) Every partner is jointly and severally liable with the firm and the other partners for all the debts and obligations of the firm incurred while he is a partner.
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