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Admission of a Minor into an Existing Partnership
A minor cannot become a partner in a new partnership firm upon its formation. Section 11 of the Indian Contract Act renders a minor incompetent to enter into a valid contract, including a partnership agreement.
Consequently, as contracts involving minors are void ab initio, a minor may only be admitted into an existing partnership firm for their benefit (i.e., to share in the profits), without bearing any losses incurred by the firm.
However, admission of a minor into an existing partnership requires unanimous consent from all partners.
Section 30 outlines the rights and liabilities of such a minor member (not partner) of the firm:
The minor has the right to a share of the firm’s property and profits as agreed upon by the partners.
The minor has the right to access, inspect, and copy any of the firm's accounts.
The minor is not personally liable for the acts of the firm, but their share in the firm’s property and profits is liable.
The minor cannot file a suit against other partners for accounts or payment of their share unless they intend to sever ties with the firm.
Upon filing a suit to sever ties, their share in the firm’s profit or property is determined by valuation under Section 48.
Within six months of attaining majority or knowledge of admission to the firm's benefits, the minor may give public notice to become or not become a partner.
If the minor chooses to become a partner, they become liable for the firm's debts incurred since admission to the firm's benefits. Failure to give public notice will have the same effect.
English vs. Indian Law
However, English law differs on two points:
The minor becomes liable for firm debts from the date of attaining majority.
Public notice must be given within a reasonable time, not necessarily within six months.
Mode of Giving Public Notice
Section 72 prescribes the following mode for giving public notice:
(a) For registered partnership firms:
(i) A copy of the notice must be sent to the Registrar of Firms.
(ii) A copy of the notice must be published in the local Official Gazette and at least one vernacular newspaper circulating in the district where the firm is situated or has its principal place of business.
(b) For unregistered partnership firms:
A copy of the notice must be published in the local Official Gazette and at least one vernacular newspaper circulating in the district where the firm is situated or has its principal place of business.
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