LIMITED PARTNERSHIP

A limited partner differs from a general partner in as much as a limited partner is liable for the debts of the firm to no greater extent than the capital he has contributed to the partnership. A limited partnership must be registered and there must be at least on general partner liable for the whole of the firm’s debts. A limited partner must take no part in the management of the firm’s business and may not act as agent of the firm. If he does, he becomes liable as a general partner. Limited partnerships were authorized by the limited partnership Act of 1907, but they are not very commonly met with nowadays, since the private limited company is more a popular means for securing a limitation of liability.

                                Merits and Demerits of partnership –
       A partnership has the clear merits indicated by the aphorism that two heads is better than one. One partner may be a third first rate organizer, a fourth act, as traveler and so on and if all work together in corporation, they can together, benefit results that no one of them could accomplish singly. The major demerits are the unlimited liability of the partners, the unwillingness on the part of so many business men and women to assume this liability explains the growth in Joint stock companies. Additional capital is more easily raised by company than by a partnership.

                 METHODS OF SHARING PARTNERSHIP PROFITS-

       Profits are shared in same proportions as the partners’ capital bears each other. In some agreed proportion which is not the same as the partners, capital proportions; this method may be adopted when a partner has small capital but possesses technical knowledge. When there is a sleeping partner, the active partners may receive remuneration for his services, the reminder being shared. In most cases where the partners wish to ascertain the return made over and above what could be earned if the capital were invested in sound securities , an agreed interest rate on capital is first allowed, say 5% and percentage remaining is divided in two.

         A Method Combining and the active partner receive remuneration for his services, then interest is allowed on the capital of the partners and any remainder is shared as in. Occasionally a worker is raised to the honor of a junior partner but in the probationary stage receives a fixed salary. In due course, the junior is admitted to take a share in the profit.

                 THE LIMITED LIABILITY COMPANY           

       This is the most important form of business organization. There are companies that have been created under charter granted by the crown and other companies notably railway and public utility companies that are created by special Acts of parliament but by far the greater number of companies have been formed under a group of general Acts known as the companies Acts which have all been consolidated by companies Act 1948, now the governing Act. This rules in all British crown colonies and protectorates of which Nigeria was.

       The position of a member of a Limited Liability Company differs in important aspects from that of a partner in a firm. Togetherness depends on mutual trust between the partners and in the absence of agreement to the contrary; each partner has equal rights with his co-partners in relation to the business and its management. But there is no relationship of trust between members of a company and a member as such has no right at all to interfere in the management of the company’s business which is conducted on behalf of all members termed directors. Again, a partner is so closely identified with his firm that the firm’s debts are his debts and his liability for them is unlimited. A limited liability company, is defined as a fictitious person quite separate from its members; it’s debts are not debts of members and when a member has fulfilled the contract he made with the company when agreed to take his shares, his liability is at an end, no matter how deeply the company may become involved in debts and how impossible it may be for the company to discharge those debts.

       The formation/Promotion of a company-Usually a public company is first formed by the person termed a promoter. He it is who as it were first conceives the idea for the birth of the company. His conception may be initially, merely an idea of an entirely new undertaking say to treat a primary product such as for instance cotton by an entirely new process by which can be converted into textile, paper and many more.

     
           Two Or more firms in a similar line of business, if amalgamated and floated as a public company would do better in combination, than either of them could still be carrying on-

 very first things, a promoter does is to enter into an agreement either with the inventor of the new process  or with the owners  of the single or multiple businesses by which the inventor or the owners are to be adequately paid for their interest  either in cash or in shares  in the company he proposes to float. Normally, the vendors take a proportion of the purchase price in cash and a proportion in shares. The purchase consideration having been settled with the assistance of accountants and solicitors acting for each side, the promoter proceeds to prepare a document termed a PROSPECTUS.