PARTNERSHIP
Partnership is the relationship which subsists between persons
carrying on business in common with a view of profit – section 3(1) of Partnership Law of Lagos Cap. PI 2009
According to section 1(1) of
Partnership Act, 1890, partnership is the relationship which subsists
between persons carrying on a business in common with making a view. That is,
it involves not less than two persons to start a partnership but not more than
twenty (20) persons. A partnership of more than 20 persons will, as a general rule,
be an illegal association – Akinlose v. A. I. T. Co. Ltd (1961) WNLR
503.
It lacks legal capacity and the partners are personally liable for
the debts and liabilities of the partnership unless it is a limited
partnership. The formation and terms may be evidenced by partnership articles
under seal or by mere agreement which may be written or oral – Ojemen
v. Okoafuda (1977) NCLR 192 at 197 – 198.
A partnership does not have perpetual succession like incorporated
companies. Equality is the rule in partnership unless otherwise expressly
stated. Though, every partner is also jointly and severally liable for the
liability of the firm because there is no separate legal personality.
Partnership is based largely on the agreement of the parties. As
such, there are several essential elements of partnership which are agreement, contribution to capital, and
sharing of profit.
Thus, an association in existence must have 3 (three) characteristics
before it can qualify as a partnership. These are –
1.
There must be a business – Henshaw
v. Roberts (1966) NNLR 158; Uredi v. Dada (1988) 1 NWLR (Pt. 69) 237.
2.
The business must be carried on
in common by two or more persons; and
3.
The intention must be to make
profit – Ugorji v. Uzuokwu (1972) 1 All NLR (Pt. 1) 289.
Finally, every partner has a right to participate in the management
of the firm except a sleeping partner (that is, one who is not active in the
management of partnership) – section 5
and 24(5) of the Partnership Act. And, a partnership is not limited or
circumcised by the ultra vires doctrine
as they are empowered to undertake any kind of legitimate business of their
choice.
DISSOLUTION OF PARTNERSHIP
This can be caused by any of the partners in the following ways –
1.
By act of the parties. This can be done
either –
(i)
By giving notice of intention
to dissolve the partnership if provided for in the agreement – section 33(1)(c) of Partnership Law of
Lagos; or
(ii)
By reason of ill-health making
a partner permanently incapacitated and the partnership not being able to
continue; or
(iii)
Where a partner creates a
charge on his or her share of the partnership property – section 34(b) of Partnership Law of Lagos; or
(iv)
By providing for a clause like
power of expulsion in the agreement.
2.
By operation of law if –
(i)
It is for a fixed term at the
expiration of the term – section 33(1)
of Partnership Law of Lagos.
(ii)
It is for an undertaking at the
performance of the undertaking – Ureli v. Dada (1988) NWLR (Pt. 69) 237.
(iii)
It is supervening illegality – section 35 of Partnership Law of Lagos.
(iv)
It is for death or bankruptcy
of a partner – section 34(a) of
Partnership Law of Lagos.
3.
By order of Court, in which a partner
can apply that the partnership be dissolved based on –
(i)
Mental ground; or
(ii)
Breach of agreement; or
(iii)
Permanent incapacity; or
(iv)
Carrying on the business at a
loss or on any equitable ground – section
36 of Partnership Law of Lagos.
PROCEDURE
1.
Notice of requirement,
dissolution, or expulsion is served on another partner referring to the
appropriate clause in the partnership agreement.
2.
The partners prepare the
dissolution agreement.
3.
Notice of dissolution is given
to Corporate Affairs Commission, if registered.
4.
Notice of dissolution is
published in the gazette and national newspapers.
5.
Notice of dissolution is given
to clients or customers.
BUSINESS NAME
These are names registered by individuals and partners when carrying
out business. Such business names are to be registered with the Companies and
Allied Matters Act, Cap C 20 LFN 2004.
The registration of business names is administered by the Corporate
Affairs Commission. Section 570 of CAMA provides
that “there shall be established in each State of the Federation, a register
office of business names where there shall be kept a register in the prescribed
form in which shall be entered such matters as are required by this Act or any
regulation made thereunder to be entered in it.”
DISSOLUTION OF BUSINESS
NAMES
The Registrar has power to remove a business name from the register if
the firm, individual or company is no longer carrying on business under the
following circumstances –
1.
If the firm, company or
individual ceases to carry on business in the business name.
2.
A notice shall be delivered or
posted to the Registrar within three (3) months after the business has ceased
to be carried on, stating that the firm or individual has ceased to carry on
business – section 578(1) of CAMA.
3.
Upon delivery of the notice to
the Registrar, the Registrar may remove the firm, company or individual from
the register.
4.
If the Registrar has reasonable
cause to believe that the firm, company or individual is not carrying on
business, the Registrar may send a notice to the firm, company or individual
enquiring whether or not the business is being carried on. Where there is no
response within two (2) months, or the answer to this is that there is no business
being carried on, the Registrar may remove the business name from the Register
– section 578(3) and (4) of CAMA.
INCORPORATED TRUSTEES
This is provided for under PART
‘C’ of CAMA. It is any class of persons bound together by custom, kinship,
nationality or any association for educational, literary, cultural or
charitable purpose – section 590 of CAMA.
It must not be profit oriented.
From the date of registration, the trustee(s) shall become a body
corporate by the name prescribed in the certificate and shall have perpetual
succession, common seal, legal capacity, and power to hold and dispose land – section 596(1) of CAMA. The common seal
must have a device approved by the Commission, and any instrument to which the
seal is affixed in apparent compliance with the regulation for the use of the
seal is binding on the corporate body notwithstanding any defect or
circumstance affecting the execution of such instrument – section 604 of CAMA. The corporate body may contract in the same
form as an individual – section 605 of
CAMA. Though, no portion of the property may be paid or transferred in any
form to any of the members of the association – section 603(1); except as bona
fide and reasonable payment for services – section 608(5) of CAMA.
The name or objects of the corporation may be altered or changed – section 597 of CAMA. the trustees shall
apply to the commission in the prescribed form setting out the alterations
desired and attaching a copy of the resolution approving the change and duly
certified by the trustees. If satisfied that the proposed change is prima facie lawful, the committee shall
cause it to be published in two daily newspapers in the same way as an
application for incorporation, calling for objections. It shall also direct the
corporation to display a notice for the proposed change or alteration in a
conspicuous place at the corporation’s office and any such place where a
majority of members are likely to see it for a period of at least 28 days – section 597(2) of CAMA. If the
Commission assents to the application, the alteration shall be made and in the
case of a change of name, the Commission shall issue a new certificate in the
new name in place of the former certificate – section 597(4) of CAMA.
A trustee must not be –
1.
An infant,
2.
A person of unsound mind,
3.
An undischarged bankrupt, or
4.
A person who has been convicted
of an offence involving fraud or dishonesty within five years of his proposed
appointment – section 592(1) of CAMA.
The trustees of a corporation are required to deliver to the
Commission an annual return showing, inter
alia, the particulars of the corporation, that is, the name, address and
occupations of the trustees, and members of council or governing body, etc. The
return must be submitted not earlier than 30th June or later than 31st
December of each year, but no return is required for the year in which trustees
are incorporated – section 607(1) of
CAMA.
The corporation may be dissolved by the court on a petition which
may be brought for that purpose by the governing council or body, or by one or
more of the trustees, or by members of the association constituting not less
than fifty percent (50%) of the total membership or by the commission – section 608(1) of CAMA. It shall be
dissolved if the aims and objectives have been fully realized and there is no
longer need for its existence, or that its aims and objectives have become
illegal or otherwise contrary to public policy, or that it is form for a
specified period which has elapsed, or that it is just and equitable in all the
circumstances that it should be dissolved – section 608(2) of CAMA.
After dissolution of the corporation, and satisfaction of its debts
and liabilities, any remaining property of the corporation cannot be
distributed to members of the association, but must be given or transferred to
some other institutions having objects similar to those of the body – section 608(4) of CAMA. In cases where
the property is not transferred to such institutions, it may be transferred to
some charitable object – section 608(5)
of CAMA.
DISSOLUTION OF
INCORPORATED TRUSTEE
This may be dissolved
through the following –
1.
Dissolved by the Federal High
Court upon a petition brought for the purpose of dissolution by any of the
following persons –
a)
The governing body or council;
or
b)
One or more trustees; or
c)
Members of the association
constituting not less than fifty per cent (50%) of the total membership; or
d)
The commission – section 608(1) of CAMA.
2.
At the hearing of the petition,
all persons whose interest or rights may be affected, in the opinion of the
court, shall be put on notice.
3.
If there remains after the
satisfaction of all its debts and liabilities, any property whatsoever, such
shall not be paid or distributed among the members of the association but shall
be given or transferred to other institutions having similar objects to the
objects of the body, such institutions to be determined by the members of the
association at or before the time of dissolution or be transferred to some
charitable object – section 608(3),(4)
and (5) of CAMA.
The grounds upon which an application for dissolution can be done
are –
1.
That the aims and objects for
which it was established have been fully realised and no useful purpose would
be served by keeping the corporation alive;
2.
That the body corporate is
formed to exist for a specified period and that period has expired and it is
not necessary for it to continue to exist;
3.
That all the aims and objects
of the association have become illegal or otherwise contrary to public policy;
and
4.
That it is just and equitable
in all the circumstance that the body corporate be dissolved – section 608(2) of CAMA.
ETHICAL
ISSUES
1.
Rule 14(1) of Rules of Professional Conduct (RPC), 2004 – A lawyer shall dedicate and devote his time to his client, to act in
a manner consistent with the best interests of the client.
2.
Rule 16 of RPC – A lawyer shall
represent his client competently.
(sample draft on notice of dissolution)
NOTICE OF DISSOLUTION
To ............................................................
(name of the partner to whom notice is to be given)
Pursuant to clause .................................... of our
partnership agreement (or deed of partnership) dated the
........................................... day of
....................................
I hereby give you notice dissolving the partnership subsisting between
us under the said agreement (or deed).
I hereby exercise my option to purchase on the date of dissolution
your share in the partnership on the terms therein stipulated.
Dated this................. day of .................................
20......
_____________________________
Signature of partner(s) giving notice.
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