Reconsittution of partnership firm
kalpesh1963
(Querist) 25 February 2012
This query is : Resolved
can I reconstitute the partnership firm bu inducting my son as partner. The new constitution : myself ,wife and son.the ratio of profit would be 1% 1% and 98% respectively.
Now I have given personal guarantee for the cash credit availed.
Can I reconstitute the firm under such circumstances.
Raj Kumar Makkad
(Expert) 25 February 2012
Your personal guarantee shall not affect the reconstitution of your partnership in the given matter.
You can do so as and when you dim fit but it shall be good to intimate the banker in this regard to avoid any confusion at any level..
V R SHROFF
(Expert) 26 February 2012
YES, You can reconstitution of your partnership after informing your banker in advance. , to receive prior written permission.
adv. rajeev ( rajoo )
(Expert) 26 February 2012
yes you can reconstitute the firm by inducting your son as partner.
Adv.R.P.Chugh
(Expert) 26 February 2012
Watch out as per S.38 - a continuing guarantee, subject to agreement to the contrary, is revoked on change in constitution of firm, so it's better to get in touch with banker and make the necessary amends in the guarantee bond
PARDEEP KUMAR
(Expert) 26 February 2012
Bharat is correct. Also please see clause of your existing partnership deed, its registration status etc., upon going through the same, one can reply your query with more perfection. In general, there is no hitch or bar in re-constitution or adding another partner in existing firm. For guarantee etc., purposes it would be more appropriate for you to continue with the same deed and make a supplementary deed for the purposes, copy of which may also be provided to the Bank etc., by this method you won't require re-constitution of the firm.
kalpesh1963
(Querist) 26 February 2012
reconstitution of partnership with change in profit sharing ratio.
Which will affect the personal guarantee given to bank for the load.
shivam......
(Expert) 27 February 2012
Agree with Mr Bharat..
M V Gupta
(Expert) 27 February 2012
I agree with the above views.
malipeddi jaggarao
(Expert) 28 February 2012
What I understood from your query is that the partnership firm with you and your wife as partners. This firm has availed cash credit with the Bank and you have given your personal guarantee.
Now you wish to induct your son as third partner. Am I correct.
If so,
1. There is no restriction for inducting the third partner.
2. You have to inform the bank before reconstitution.
3. They will review the cash credit account and with the consent of the existing partners they will transfer this liability to the new account to be opened by the new firm. This is required for crystalizing the liability at the time of reconstitution.
4. As far as your personal guarantee is concerned, it will not effect adversely. It will continue to cover the old liability (before crystalization). All the partners are required to execute new documents for cash credit limit. You will be also required to give your personal guarantee afresh. The old set of documents form part of the new set, as the Bank will be able to prove the transition in case of need.
