Types of partners class is for the HSC candidates or for the students of class 11 and 12. This class is a part of HSC (11-12) [ এইচএসসি (১১-১২) ], business organization and management. You can find it as Business Environment, chapter 4, the topic name is “Types of partners”. This class will help you in your upcoming HSC examination.
Types of partners
Partner
A partner is an individual who jointly with other people (partners) agrees to set up a business firm and provide goods and services through it. Partners of a partnership firm can be of different types, such as active partners, secret partners, minor partners, nominal partners, or sleeping partners. Each of these partners has different qualities and roles in the running of a partnership firm.
Types of Partners
1. Active Partner
A partner who actively participates in the management of an organization is known as an Active Partner. An active partner has unlimited liability, i.e., in case of insolvency, his/her personal assets can be used to pay off debts. Besides, an active partner also contributes capital to the firm and gets a share in the company’s profit or loss in return.
2. Sleeping or Dormant Partner
As the name suggests, a partner who does not participate in the management of a company is known as a Sleeping or Dormant Partner. The sleeping partners are bound by the activities performed by the active partners and have unlimited liability, i.e., in case of insolvency, his/her personal assets can be used to pay off debts. Besides, they also contribute capital to the firm and get a share in the company’s profit or loss in return.
3. Secret Partner
A partner whose association with the firm is kept a secret or is unknown to outsiders is known as a Secret Partner. A secret partner has unlimited liability, i.e., in case of insolvency, his/her personal assets can be used to pay off debts. They also contribute capital to the firm and participate actively in the management of a company.
4. Nominal Partners
The partners who are not real partners of a firm are known as Nominal Partners. They do not contribute capital, do not have unlimited liability, do not participate in the management of the firm, and do not get any share in the profit or loss of the company. Their role as a partner of the firm is only to lend their name and reputation to benefit the company.
However, the nominal partners are liable to the outsiders for the debts they have given to the company after believing that the nominal partner is a partner of the firm. Nominal Partners are of two types, namely Nominal Partner by Estoppel and Nominal Partner by Holding Out.
i) Nominal Partner by Estoppel
An individual who by his own conduct or words accepts that he is a partner of a partnership firm is known as a Nominal Partner by Estoppel. For example, Sumit, who is not a partner of ABC Ltd. applies for a loan by telling the financier that he is a partner of that firm. Now, Sumit will be considered a nominal partner by estoppel. However, Sukant is an active partner who has also taken a loan from the financier. Now, if the partnership firm fails to pay the loan amount taken by Sukant, he can claim this amount from Sumit.
ii) Nominal Partner by Holding Out
An individual who is not a partner of a firm, but does not deny when other people call him/her a partner of the firm is known as a Nominal Partner by Holding Out. For example, Sayeba, an active partner of a firm, applies for a loan from a commercial bank by saying that Akanksha is also a partner of the firm, to which Akanksha shows no objection. In this case, Akanksha will be considered a nominal partner by holding out and will be liable to pay off the debt taken by the firm in her name.
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