Withdrawal of assets


Hello, 

I had entered in a partnership with one individual in the ratio of 50-50 in profits and losses with the understanding that I shall be the investment partner (nothing as such mentioned in the deed) so whatever expenditure went towards establishing the firm and running it till date was provided by myself and the earnings of the firm.

The property that was being used as the premises of the firm is a leasehold property from a government industrial body which has executed a 99 year lease deed with myself as an individual and not the my partnership firm. I introduced this property into the firm as a capital introduction by myself.

Now, The firm has existed for 1 and half accounting years. We have incurred losses in both years and my partner has withdrawn certain amounts as drawings as well. I dont want to continue this business since my partner refuses now to be a partner in losses and further demands that he draw more for himself, this is unacceptable to me and thus we have decided to close the firm pending further discussions.

As things stand currently his ledger in the books of the firm stands at a substantial debit by adding up his drawings and his share of losses as agreed in the Deed and my ledger in the books stands with a substantial credit even after minusing the little drawings that I have taken and my share of losses. 

The deed states that any of the partners may take management and control and take decisions. My question now is - 1. Can I withdraw the said leasehold property from the firm as a drawing just as I had introduced it as a capital? 2. At what valuation, at the depriciated value or other rate?

Please let me have your comments and advice on the same.

Thanks.

 
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Advocate/Attorney

No you cannot withdraw your leasehold property. Once you have introduced into the partnership firm it is the property of the partnership.  

 

However, you can dissolve the partnership. Both the partners are equally liable for the profits and losses.  Though your partner had withdrawn more amount than his share, nothing to worry, you can recover the same from him by a civil suit. 

 
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Hi! I have a similar query.

We are family comprising 2 sons & father in a partnership firm. Due to age father wants to distribute assest equally among his sons. 

The firm has 2 leashold properties of equal value held in the name of the firm.

Can we widhdraw the asset & allocate each to individual sons (partners) ?

If not. How does one allocate so that there is no dispute amoung the sons after his demise assuming that the sons want individual control on the assets & also continue the business in the same firm.

 

 
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Advocate/Attorney

In this case there is no need to dissolve the partnership.  You can re-constitute the partnership by saying the same thing which you are willing and should be signed by all the partners.  Then it will be binding on all the partners.  Even if your father expires, (if you mention that even after death of your father, the partnership will continue)  the partnership will be not be dissolved and the the property will be distributed automatically to both sons (In the form of undivided share).  If they want to divide it mutually, they can enter into registered partition or if there is any dispute among them, one of the party has to file civil suit for partition.   

 
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