Q.Do you agree/disagree with the following statement:
Partnership is an association of two or more persons.

Agree — under the Indian Partnership Act, 1932, a partnership is set up to run a business for profit, which makes it a trading concern.

Reasoning

Section 4 of the Indian Partnership Act, 1932 defines partnership as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. The key features that make a firm a trading concern are:

The statement is correct — Agree. A partnership by its very definition requires two or more persons.

Reason: Section 4 of the Indian Partnership Act, 1932 defines partnership as "the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all." A relation cannot exist with a single person, so a partnership must have a minimum of two partners (maxim …

The correct option is 50. Earlier the maximum was 10 (banking) / 20 (other business) under the Companies Act, 1956; the Companies Act, 2013 raised and standardised the ceiling to 50 partners (Rule 10 of the Companies (Miscellaneous) Rules, 2014).

Explanation

• The Indian Partnership Act, 1932 fixes only a minimum of 2 partners; it does not fix a maximum. …

A partner who contributes neither capital nor active participation, but only his name, is a Nominal Partner.

…