Admission of a new partner | Meaning of Admission of a new partner | Conditions of admission of a new partner.
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| Admission of a new partner. |
Meaning of Admission of a new partner
When a new partner is admitted in a firm with the consent of present partners then such a situation is called 'Admission of a New Partner. In this situation it is felt necessary that present and new partner make agreement.
Definition of Admission of a new partner.
According to Section 31 (1) of Indian Partnership Act, 1932, "If there is no other agreement between the partners then a new partner cannot be admitted in the firm without the consent of other partners." It means that a new partner can be made a partner in the firm only with the consent of other partners.
Need of a New Partner or Conditions of Admission of a new partner.
There can be following conditions for admission of a new partner in the firm:
2. To increase managerial ability: For proper management and operation of the expanding business, a capable and experienced person can be admitted as a partner.
3. On retirement or death of a partner :A new partner may be admitted to fill up the requirement created due to, retirement or death of a partner.
4. To motivate employees: Partners can have a policy to promote a honest and hardworking employee as a partner, so as to motivate him.
5. Forgrowth of the business: For goodwill, proper reputation and prosperity an influential person can be admitted as a partner.
6. In case of foreign trade: To expand business in foreign countries, a partner may be appointed to look after the business abroad.
7. To avoid business competition: To avoid competition from rival organisations their owner may be admitted as a partner.