What is a partnership?: Partnership is a business entity regulated by the Incorporated Private Partnership Act, 1962 (Act 152). Partnership is a registered association of at least two but not exceeding twenty individuals carrying on business for the purpose of making profits. No body corporate can be a member. – Baidoo v Sam – TAYLOR JSC
What are the essential criteria of partnerships? At least 2 but not more than 20 individuals. It must be duly registered under Act 152. Object must be for profit – The profits can subsequently be used for charitable purposes as seen in Mensah & Ors v Adu & Ors. It must have no body corporate as member.
Entities Expressly Excluded from Being Regarded as Partnerships: Individuals registered under the Companies Act. Entities formed under any other enactment.Body corporate formed under the law of a foreign country. Joint venture without a firm name for one or more specific operation. Family ownership or co-ownership of property
Entities that can be converted into Partnership: Joint ventures without a firm name for one or more specific operation & Family ownership or co-ownership of property. They can convert if they comply with registration and definition requirements.
Evidence of Partnership: Sharing of Net Profits is Prima Facie proof that a partnership exists. Remuneration of servants & agents using a part of the profits does not provide proof of partnership. Partnership status can be vacated if established that there was non-participation or participation without authorization.
Formation of partnership: Partnerships are formed when they are duly registered under Act 152.Registration is effected by the submission of documents SIGNED by partners with the payment of prescribed fees. Partnership Agreement & Statement in the Prescribed form
What constitutes the partnership agreement?: This is a valid, enforceable contract between the individual partners intending to conduct business together. Terms of a partnership agreement are left to partners – freedom to contract prevails.
What constitutes the Statement?: Firm name, General nature of business, Residential address and P.O. Box of principal place of business and any other place where business is carried, Names, former names, addresses and business occupation of the partners, Date of commencement of partnership,Particulars of charges or mortgages that require registration under Act 152
NB: The statement must be submitted to the Registrar every year in satisfaction of Annual Renewal. Failure attracts a 25 PU fine and a disability on enforcement of contracts.
What is the rule of constructive notice in respect to the statement?: A person will not be deemed to have knowledge of any particulars referred to in the statement EXCEPT charges & mortgages that require registration.
Grounds for refusal of registration?
- Partnership is expressly excluded under the Act
- Any business to be carried on by the firm is unlawful or illegal
- Misleading or undesirable name;
- Any Partner lack capacity to contract – minority or mental
- Any Partner has been guilty of fraud or dishonesty within the preceding five years, whether convicted or not, in relation to trade or business;
- Any partner is an undischarged bankrupt
- Statement is incomplete, illegible, inaccurate, irregular or on weak paper.
- The Registrar may seek clarity from a partner or former partner or call for production of books in forming an opinion of whether or not to refuse.
Appealing a Refusal: Where the refusal is grounded on
- Express exclusion of the entity under the Act (ground a)
- An allegation of unlawful or illegal business (ground b)
- An allegation of partners lack of capacity (ground d)
- An appeal may lie in the High Court by a partner OR person claiming to be a partner.
- Refusals on the ground of Fraud or dishonesty by a partner over the last 5 years related to trade or business.
- Partner’s bankruptcy
Are final, and can only be potentially challenged under Article 296 of 1992 constitution.
Registrars Next Steps Following Successful Registration
- Where an application is successful the Registrar must certify under his seal that firm has been registered and incorporated
- The certificate shall state the names of the partners. State that their liability is unlimited
- It must be published in the gazette that a certificate has been issued, with its terms also included.
- The certificate + gazette notice is conclusive evidence that the firm had been duly incorporated under Act 152
Effects of Registration
- Registration confers separate legal capacity on the Firm under its name, distinct from partners
- Capable of exercising the powers of a natural person of full capacity
NB: Failure to do annual renewal does not affect legal personality acquired.
Failing to Register/ Renew:
Failing to register firm, according to the prescribed manner, failing to register changes to the firm, failing to renew registration annually attracts:
- Fine of 25 penalty units per partner per each day of default
- During the pendency of the default, the firm & partners are disabled from enforcing rights arising out of a contract action or legal proceedings.
- NB: Partners are not able to sue each other.
- This disability may be vacated where the firm makes an application for relief to the High Court. The Court has discretion to grant this if it deems it equitable and just to do so.
- The disability however does not preclude the firm from making a counterclaim, set-off when proceedings are brought against the firm.
Re Sasu Twum (deed); Sasu-Twum v. Twum: An agreement to create a partnership was not registered under Act 152, and therefore unenforceable. Hence the plaintiff who sought to claim half of the business upon husband’s demise in a supposed partnership failed.
Baidoo v Sam: The court would not lend its hand to a party who has failed to register his partnership because the claim is grounded in illegality – ex turpi causa non-oritur actio.
Lewandosky v Attorney General: The disability in S9 of Act 152 does not apply to foreign firms that do not carry on business in Ghana.This is because registration is only required for firms that carry on business in Ghana.
