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ACTS
SUPPLEMENT No. 2 26th February, 2010.
ACTS SUPPLEMENT
to The Uganda Gazette Extraordinary No. 13 Volume CIII dated 26th February, 2010.
Printed by UPPC, Entebbe, by Order of the Government.
Act 2
Partnerships Act 2010
THE PARTNERSHIPS ACT, 2010
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ARRANGEMENT OF SECTIONS.
Section.
P
ART I—PRELIMINARY.
1. Interpretation.
P
ART II—NATURE OF PARTNERSHIP
2. Definition of partnership.
3. Rules for determining the existence of partnership.
4. Mandatory registration.
P
ART III—RELATIONS OF PARTNERS TO
P
ERSONS DEALING WITH THEM
5. Power of partner to bind firm.
6. Partners bound by act on behalf of firm.
7. Partners using credit of firm for private purposes.
8. Effect of notice that firm not bound by acts of partners.
9. Liability of partners.
10. Minor partner not personally liable for firm’s obligations.
11. Liability of minor partner on attaining majority.
12. Liability of firm for wrongs of partners.
13. Liability for wrongs joint and several.
14. Misapplication of money or property received for or in custody of
firm.
15. Improper employment of trust property for partnership purposes.
16. Persons liable by holding out.
17. Admissions and representations of partners.
18. Notice to acting partner to be notice to firm.
19. Liabilities of incoming and outgoing partners.
20. Revocation of continuing guarantee by change in firm.
1
section.
P
ART IV—RELATIONS OF PARTNERS TO ONE ANOTHER
21. Variation by consent of the terms of partnership.
22. Partnership property.
23. Property bought with partnership money.
24. Conversion into personal estate of land held as partnership
property.
25. Procedure against partnership property for partner’s separate
judgment debt.
26. Rules as to interests and duties of partners subject to special
agreement.
27. Expulsion of partner.
28. Retirement from partnership.
29. Presumption of continuance of partnership.
30. Duty of partners to render accounts, etc.
31. Accountability of partners for private profits.
32. Duty of partner not to compete with firm.
33 Rights of assignee of share in partnership.
P
ART V—DISSOLUTION OF PARTNERSHIP AND ITS CONSEQUENCES
34. Dissolution by expiration or notice.
35. Dissolution by bankruptcy, death or charge.
36. Dissolution by illegality of partnership.
37. Dissolution by court for incapacity, etc.
38. Rights of persons dealing with firm against apparent members of
firm.
39. Rights of partners to notify dissolution.
40. Continuing authority of partners for purposes of winding up.
41. Rights of partners as to application of partnership property.
42. Apportionment of premium where partnership prematurely
dissolved.
43. Rights where partnership dissolved for fraud or misrepresentation.
44. Right of outgoing partner in certain cases to share profits made
after dissolution.
45. Retiring or deceased partner’s share to be a debt.
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Section.
46. Rules for distribution of partnership assets on final settlement of
accounts.
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ART VI—LIMITED LIABILITY PARTNERSHIPS
47. Limited liability partnership.
48. Registration of limited liability partnership.
49. Reservation of name.
50 Particulars of registration of limited liability partnership.
51. Registration of change in particulars of liability limited
partnership.
52. Management of limited liability partnership.
53. Winding up of limited liability partnership.
54. Notice of arrangement or transaction to be advertised in Gazette.
55. Inspection.
56. Conversion of partnerships.
57. Effect of conversion on pending court action.
58. Winding up of partnership.
59. Postponement of share of profits in case of bankruptcy.
P
ART VII—MISCELLANEOUS
60. Existing rules applicable to partnerships.
61. Regulations.
62. Amendment of Schedule.
63. Repeal of Cap.114.
SCHEDULE—Currency Point
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THE PARTNERSHIPS ACT, 2010.
An Act to amend and consolidate the law relating to
partnerships; to provide for the formation of limited liability
partnerships; to repeal the Partnership Act, Cap. 114; and to
provide for other related matters.
D
ATE OF ASSENT: 27th January, 2010.
Date of Commencement:
26th February, 2010.
B
E IT ENACTED by Parliament as follows:
P
ART I—PRELIMINARY
1. Interpretation.
In this Act, unless the context otherwise requires—
“business” includes every trade, occupation or profession;
“court” means the High Court;
“currency point” has the value assigned to it in the Schedule to
this Act;
“firm” means persons who have entered into a partnership with
one another;
“firm name” means the name under which the firm business is
carried on;
“Minister” means the Minister responsible for justice;
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“minor’’ means a person under the age of eighteen years;
“partnership” means a partnership referred to in section 2 and a
limited
liability partnership referred to in section 47;
“professional” means a person who is a member of a profession
regulated by the laws of Uganda;
“registrar” means the registrar of companies designated as such
under the Companies Act;
“trustee” means one, who having legal title to property, holds it
in trust for the benefit of another person and owes a judicial
duty to that beneficiary;
“trust property” means property subject to a trust normally held
by trustees.
P
ART II—NATURE OF PARTNERSHIP
2. Definition of partnership.
(1) Subject to subsection (2), a partnership is the relationship
which subsists between or among persons, not exceeding twenty in
number, who carry on a business in common with a view to making
profit.
(2) Where a partnership is formed for the purpose of carrying on
a profession, the number of professionals, which constitutes the
partnership shall not exceed fifty.
(3) The relationship between or among members of any
company or association which is—
(a) registered as a company under the Companies Act or any
other Act relating to the registration of joint stock
companies; or
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(b) formed or incorporated by or in pursuance of any other
written law,
is not a partnership within the meaning of this Act.
3. Rules for determining the existence of partnership.
In determining whether a partnership does or does not exist, regard
shall be had to the following rules—
(a) joint tenancy, tenancy in common, joint property, common
property or part ownership does not of itself create a
partnership;
(b) the sharing of gross returns does not of itself create a
partnership, whether the persons sharing those returns have or
do not have a joint or common right or interest in any property
from which, or from the use of which, the returns are derived;
(c) the receipt by a person of a share of the profits of a business is
prima facie
evidence that he or she is a partner in the business,
but the receipt of such a share, or a payment contingent on or
varying with the profits of a business, does not of itself make a
person a partner in the business; and in particular—
(i) the receipt by a person of a debt or other liquidated
amount by installments or otherwise, out of the
accruing profits of a business, does not of itself make
that person a partner in the business or liable;
(ii) a contract for the remuneration of a servant or agent of
a person engaged in a business by a share of the profits
of the business does not of itself make the servant or
agent a partner in the business or liable;
(iii) a person, being the widow or child of a deceased
partner and receiving by way of annuity, a portion of
the profits made in the business in which the deceased
person was a partner, is not, by reason only of that
receipt, a partner in the business or liable;
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(iv) the advance of money by way of a loan to a person
engaged, or about to engage, in any business on a
contract with that person that the lender shall receive a
rate of interest varying with the profits, or shall
receive a share of the profits arising from carrying on
the business, does not of itself make the lender a
partner with the person carrying on the business or
liable as such if the contract is in writing, and signed
by or on behalf of all the parties to the contract;
(v) a person receiving, by way of annuity or otherwise, a
portion of the profits of a business in consideration of
his or her sale of the goodwill of the business is not,
by reason only of the receipt, a partner in the business
or liable;
(d) the ordinary evidence of partnership, including—
(i) whether the accounts are prepared for internal use or for
other purposes;
(ii) any admissions by the members of the partnership;
(iii) advertisements which include the alleged partners;
(iv) agreements or other documents, formal or otherwise,
which disclose the partnership relationship;
(v) the manner in which bills of exchange have been drawn,
accepted or endorsed;
(vi) judgments of courts of law in which a partnership has
been held to exist;
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(vii) meetings which partners attended or were expected to
attend;
(viii) payment of money to courts of law for the liability of
the partnership;
(ix) letters and memoranda which relate to admission of a
person in the partnership or which give a person a
share in the profits as intended by the partners;
(x) any release executed by all the alleged partners; and
(xi) recitals in the agreement in which the partners are
parties.
4. Mandatory registration.
(1) A firm carrying on business in Uganda under a business
name which does not consist of the true surnames of all partners who
are individuals and the corporate names of all partners which are
corporations without any addition other than the true first names of
individual partners or initials of the first names; and the corporate
names of all partners which are corporations, shall register its name
under the Business Names Registration Act.
(2) Where any persons operate a business as a partnership in
contravention of subsection(1), every party to the business commits
an offence and is liable on conviction, to a fine not exceeding twenty
currency points and to an additional fine not exceeding five currency
points for each day for which the offence continues after the
expiration of fourteen days.
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ART III—RELATIONS OF PARTNERS TO PERSONS DEALING WITH THEM
5. Power of partner to bind firm.
(1) Every partner is an agent of the firm and his or her other
partners for the purpose of the business of the partnership.
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(2) The act of a partner who does any act for the purpose of
carrying on the ordinary course of business of the firm binds the firm
and his or her partners, unless the partner so acting does not have
authority to act for the firm in the particular matter, and the person
with whom the partner is dealing—
(a) knows that the partner has no authority; or
(b) does not know or believe him or her to be a partner.
6. Partners bound by act on behalf of firm.
(1) An act or instrument relating to the business of the firm and
done or executed in the firm name, or in any other manner showing
an intention to bind the firm by any person authorised to bind the
firm, whether a partner or not, is binding on the firm and all the
partners.
(2) Subsection (1) does not affect any general principles of law
relating to the execution of deeds or negotiable instruments.
7. Partners using credit of firm for private purposes.
Where a partner pledges the credit of the firm for a purpose
apparently not connected with the firm’s ordinary course of business,
the firm is not bound, unless that partner is in fact specially authorised
by the other partners.
8. Effect of notice that firm not bound by acts of partners.
Where it has been agreed between or among the partners that a
restriction shall be placed on the power of any one or more of them
to bind the firm, an act done in contravention of the agreement is not
binding on the firm with respect to persons having notice of that
agreement.
9. Liability of partners.
(1) A partner in a firm is liable jointly with the other partners for
all debts and obligations of the firm incurred while he or she is a
partner.
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(2) Where a partner dies, his or her estate is severally liable in
due course of administration for the debts and obligations of the firm
so far as they remain unsatisfied but subject to the prior payment of
his or her separate debts.
(3) The estate of a partner who dies or who becomes bankrupt or
of a partner, who, not having been known to the person dealing with
the firm to be a partner, retires from the firm, is not liable for
partnership debts contracted after the date of the death, bankruptcy or
retirement respectively.
10. Minor partner not personally liable for firm’s obligations.
A person who is a minor according to the law to which he or she is
subject may be admitted to the benefits of partnership, but cannot be
made personally liable for any obligation of the firm; but the share of that
minor in the property of the firm is liable for any obligation of the firm.
11. Liability of minor partner on attaining majority.
A person who has been admitted to the benefits of partnership while
still a minor shall, on attaining the age of majority, be liable for all
obligations incurred by the partnership from the date of his or her
admission, unless he or she gives public notice within a reasonable
time of his or her repudiation of the partnership.
12. Liability of the firm for wrongs of partners.
Where, by any wrongful act or omission of any partner acting in the
ordinary course of the business of the firm, or with the authority of his or
her co-partners, loss or injury is caused to any person not being a partner
in the firm, or any penalty is incurred, the firm is liable for the loss, injury
or penalty to the same extent as the partner so acting or omitting to act.
13. Liability for wrongs joint and several.
A partner is liable jointly and severally with his or her co-partners for
everything for which the firm becomes liable under section 14 while
he or she is a partner in the firm.
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14. Misapplication of money or property received for or in
custody of firm.
A firm is liable to make good the loss—
(a) where one partner, acting within the scope of his or her
apparent authority, receives the money or property of a
third person, and misapplies it; and
(b) where a firm in the course of its business receives money or
property of a third person, and the money or property so
received is misapplied by one or more of the partners while
it is in the custody of the firm.
15. Improper employment of trust property for partnership
purposes.
Where a partner who is a trustee, improperly employs trust property in the
business or on the account of the partnership, no other partner is liable for
the trust property to the persons beneficially interested in it; except that—
(a) this section shall not affect any liability incurred by any
partner by reason of his or her having notice of a breach of
trust; and
(b) nothing in this section shall prevent trust money from being
followed and recovered from the firm if it is still in
possession or control of the firm.
16. Persons liable by holding out.
(1) Any person who by words spoken, written or by conduct
represents himself or herself, or who knowingly suffers himself or
herself to be represented as a partner in a particular firm is liable as a
partner to any one who has, on the faith of any such representation,
given credit to the firm, whether the representation has or has not
been made or communicated to the person so giving credit by or with
the knowledge of the apparent partner making the representation or
suffering it to be made.
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(2) A firm shall not be liable for the acts of any person who
falsely holds out himself or herself as a partner of a firm.
(3) Where, after a partner’s death, the partnership business is
continued in the firm name, the continued use of that name or of the
deceased partner’s name as part of the firm’s name shall not of itself
make his or her executors or administrators of the estate or effects
liable for any partnership debts contracted after his or her death.
17. Admissions and representations of partners.
An admission or representation made by any partner concerning the
affairs of the partnership in the ordinary course of its business is
evidence against the firm.
18. Notice to acting partner to be notice to firm.
(1) Notice to any partner who habitually acts in the partnership
business of any matter relating to the affairs of the partnership
operates as notice to the firm.
(2) Subsection (1) does not apply in case of fraud on the firm
committed by or with the consent of that partner.
19. Liabilities of incoming and outgoing partners.
(1) A person who is admitted as a partner into an existing firm
does not become liable to the creditors of the firm for anything done
before he or she became a partner.
(2) A partner who retires from a firm does not cease to be liable for
partnership debts or obligations incurred before his or her retirement.
(3) A retiring partner may be discharged from any existing liability
by an agreement to that effect between partners and the members of the
firm as newly constituted, and the creditors of the firm.
(4) The agreement referred to in subsection (3) may be either
express or inferred as a fact from the course of dealing between the
creditors and the firm as newly constituted.
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(5) A retiring partner may, notwithstanding subsection (3),
execute in writing an indemnity agreement with the members of the
firm as newly constituted, in which the members undertake to
indemnify the retiring partner of any existing liabilities.
20. Revocation of continuing guarantee by change in firm.
A continuing guarantee given either to a firm or to a third person in
respect of the transactions of a firm is, in the absence of an agreement
to the contrary, revoked as to future transactions by any change in the
constitution of the firm to which the guarantee was given or any
change in respect of the transaction for which the guarantee was given.
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ART IV—RELATIONS OF PARTNERS TO ONE ANOTHER.
21. Variation by consent of the terms of partnership.
The mutual rights and duties of partners, whether ascertained by
agreement or defined by this Act, may be varied by the consent of all
the partners, and that consent may be either express or inferred from
a course of dealing.
22. Partnership property.
(1) All property, rights and interests in property originally
brought into the partnership stock or acquired, whether by purchase
or otherwise, on account of the firm and in the course of the
partnership business are, in this Act, referred to as “partnership
property”.
(2) Partnership property must be held and applied by the partners
exclusively for the purposes of the partnership and in accordance with
the partnership agreement; except that the legal estate or interest in
any land which belongs to the partnership shall devolve according to
the nature and tenure of the land and the general rules of law
applicable to it.
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(3) Where co-owners of an estate or interest in any land which is
not partnership property are partners to profits made by the use of that
land or estate, purchase other land or estate out of the profits to be used
in similar manner, the land or estate so purchased belongs to them, in the
absence of an agreement to the contrary, not as partners but as co-owners
for the same respective estate and interests as are held by them in the
land or estate first mentioned at the date of the purchase.
23. Property bought with partnership money.
Unless the contrary intention appears, property bought with money
belonging to the firm is taken to have been bought on account of the firm.
24. Conversion into personal estate of land held as partnership
property.
Where land or any interest in it becomes partnership property, it shall,
unless the contrary intention appears, be treated as between the
partners (including the representatives of a deceased partner) and also
as between the heirs of a deceased partner and his or her executors or
administrators, as personal and not real estate.
25. Procedure against partnership property for partner’s
separate judgment debt.
(1) Execution of a decree shall not issue against any partnership
property except on a judgment against the firm.
(2) The court may, on application by summons of any judgment
creditor of a partner, make an order—
(a) charging that partner’s interest in the partnership property
and profits with payment of the amount of the judgment
debt and interest on it;
(b) appointing a receiver of that partner’s share of profits
whether already declared or accruing and of any other
money which may be coming to that partner in respect of
the partnership; and
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(c) directing all accounts, inquiries and giving other orders and
directions which might have been directed or given if the
charge had been made in favour of the judgment creditor by
the partner or as the circumstances of the case may require.
(3) The other partner or partners shall be at liberty at any time to
redeem the interest charged, or, in case of sale being directed, to
purchase it.
26. Rules as to interests and duties of partners subject to special
agreement.
The interests of partners in the partnership property and their rights
and duties in relation to the partnership shall be determined, subject
to any agreement, express or implied between the partners, by the
following rules—
(a) all the partners are entitled to share equally in the capital
and profits of the business, and must contribute equally
towards the losses whether of capital or otherwise sustained
by the firm;
(b) the firm must indemnify every partner in respect of payments
made and personal liabilities incurred by the partner—
(i) in the ordinary and proper conduct of the business of
the firm; or
(ii) in or about anything necessarily done for the
preservation of the business or property of the firm;
(c) a partner making, for the purpose of the partnership, any
actual payment or advance beyond the amount of capital
which he or she has agreed to subscribe is entitled to
interest at the rate agreed upon by the partners, and, in the
absence of any agreement, the ruling treasury bill rate shall
apply; except that in determining the rate, due
consideration shall be given to the period of repayment;
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(d) a partner is not entitled, before the ascertainment of profits,
to interest on the capital subscribed by him or her;
(e) every partner may take part in the management of the
partnership business;
(f) no partner shall be entitled to remuneration for acting in the
partnership business;
(g) no person may be introduced as a partner without the
consent of all existing partners;
(h) any difference arising as to ordinary matters connected with
the partnership business may be decided by a majority of
the partners; but no change may be made in the nature of
the partnership business without the consent of all existing
partners; and
(i) the partnership books are to be kept at the place of business
of the partnership or the principal place of business of the
partnership if there is more than one; and every partner
may, at all reasonable times, have access to and inspect and
copy any of the books.
27. Expulsion of partner.
A majority of the partners have no power to expel any partner unless
a power to do so has been conferred by express agreement between
or among the partners.
28. Retirement from partnership.
(1) Where no fixed term has been agreed upon for the duration of
the partnership, any partner intending to dissolve the partnership shall—
(a) give reasonable notice to the other partners of his or her
intention to do so; and
(b) obtain the consent of the other partners regarding the
dissolution of the partnership.
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(2) Where the other partners decline to give their consent to the
dissolution under subsection (1)(b), that partner has the option of
retiring from the partnership.
(3) Where the partnership has originally been constituted by
deed, a notice in writing signed by the partner giving the notice in
accordance with the deed shall be sufficient for the purpose of the
notice referred to in subsection (1)(a).
(4) Subject to this Act, the rights, benefits and duties of a retiring
partner shall be as agreed between or among the partners.
29. Presumption of continuance of partnership.
Where a partnership entered into for a fixed term is continued after
the term has expired, and without any express new agreement, the
rights and duties of the partners remain the same as they were at the
expiration of the term.
30. Duty of partners to render accounts, etc.
Every partner is bound to render true accounts and full information of
all things affecting the partnership to any partner or his or her legal
representatives.
31. Accountability of partners for private profits.
Every partner must account to the firm for any benefit derived by him
or her without the consent of the other partners from any transaction
concerning the partnership, or from any use by him or her of the
partnership property, name or business connection.
32. Duty of partner not to compete with firm.
Where a partner, without the consent of the other partners, carries on
any business of the same nature as, and competing with, that of the
firm, the partner must account for and pay over to the firm all profits
he or she made in that business.
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33. Rights of assignee of share in partnership.
(1) An assignment by any partner of his or her share in the
partnership, either absolute or by way of mortgage or redeemable
charge, does not, as against the other partners, entitle the assignee,
during the continuance of the partnership—
(a) to interfere in the management or administration of the
partnership business or affairs;
(b) to require any accounts of the partnership transactions; or
(c) to inspect the partnership books.
(2) An assignment in subsection (1) entitles the assignee only to
receive the share of profits to which the assigning partner would
otherwise be entitled; and the assignee must accept the account of
profits agreed to by the partners.
(3) In case of a dissolution of the partnership, whether in respect
of all the partners or in respect of the assigning partner, the assignee
is entitled to receive the share of the partnership assets to which the
assigning partner is entitled as between himself or herself and the
other partners, and, for the purpose of ascertaining that share, to an
account as from the date of the dissolution.
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ART V—DISSOLUTION OF PARTNERSHIP AND ITS CONSEQUENCES.
34. Dissolution by expiration or notice.
(1) Subject to any agreement between or among the partners, a
partnership is dissolved—
(a) if entered into for a fixed term, by the expiration of that term;
(b) if entered into for a single adventure or undertaking, by the
termination of that adventure or undertaking;
(c) if entered into for an undefined time, by the agreement of the
partners to dissolve the partnership.
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(2) In the case mentioned in subsection (1) (c), the partnership is
dissolved as from the date agreed by the partners for the dissolution
to take effect.
35. Dissolution by bankruptcy, death or charge.
(1) Subject to any agreement between or among the partners, a
partnership may, at the option of the other partners, be dissolved by
the death or bankruptcy of any partner.
(2) A partnership may, at the option of the other partners, be
dissolved if any partner suffers his or her share of the partnership
property to be charged under this Act for his or her separate debt.
36. Dissolution by illegality of partnership.
A partnership is, in every case, dissolved by the happening of any
event that makes it unlawful for the business of the firm to be carried
on or for the members of the firm to carry on business in partnership.
37. Dissolution by court for incapacity, etc.
On the application by a partner, the court may decree dissolution of a
partnership in any of the following cases—
(a) when a partner is shown, to the satisfaction of the court, to
be of permanently unsound mind, in which case the
application may be made on behalf of that partner by his or
her guardian
ad litem or next friend or person entitled to
intervene as by any other partner;
(b) when a partner, other than the partner suing, becomes in
any other way permanently incapable of performing his or
her part of the partnership contract;
(c) when a partner, other than the partner suing, has been guilty
of such conduct as, in the opinion of a court, regard being
had to the nature of the business, is calculated prejudicially
to affect the carrying on of the business;
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(d) when a partner, other than the partner suing, willfully or
persistently commits a breach of the partnership agreement,
or otherwise so conducts himself or herself in matters
relating to the partnership business, that it is not reasonably
practicable for the other partner or partners to carry on the
business in partnership with him or her;
(e) when the business of the partnership can only be carried on
at a loss; or
(f) whenever, in any case, circumstances have arisen which, in
the opinion of the court, render it just and equitable that the
partnership be dissolved.
38. Rights of persons dealing with firm against apparent
members of firm.
(1) Where a person deals with a firm after a change in its
constitution, he or she is entitled to treat all apparent members of the
old firm as still being members of the firm until he or she has notice
of the change.
(2) An advertisement in the
Gazette by any partner shall be
notice as to persons who had no dealings with the firm before the date
of the dissolution or change so advertised.
(3) The estate of a partner who dies or who becomes bankrupt or
of a partner, who, not having been known to the person dealing with
the firm to be a partner, retires from the firm, is not liable for
partnership debts contracted after the date of the death, bankruptcy or
retirement respectively.
39. Rights of partners to notify dissolution.
On the dissolution of a partnership or retirement of a partner, any
partner may publicly notify the dissolution or retirement of that
partner, and may require the other partner or partners to concur for
that purpose in all necessary or proper acts, if any, which cannot be
done without his or her or their concurrence.
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40. Continuing authority of partners for purposes of winding up.
(1) After the dissolution of a partnership, the authority for each
partner to bind the firm and the other rights and obligations of the partners
continue notwithstanding the dissolution, so far as may be necessary to
wind up the affairs of the partnership, and to complete transactions begun
but unfinished at the time of the dissolution, but not otherwise.
(2) Notwithstanding subsection (1), the firm is in no case bound
by the acts of a partner who has become bankrupt; but this section
does not affect the liability of any person who has, after the
bankruptcy, represented himself or herself or knowingly suffered
himself or herself to be represented as a partner of the bankrupt.
41. Rights of partners as to application of partnership property.
On the dissolution of a partnership, every partner is entitled, as
against the other partners in the firm and all persons claiming through
them in respect of their interests as partners—
(a) to have the property of the partnership applied in payment of
the debts and liabilities of the firm, and to have the surplus
assets after such payment, applied in payment of what may be
due to the partners respectively after deducting what may be
due from them as partners to the firm; and
(b) for the purposes of paragraph (a) any partner or his or her
representatives may, on the termination of the partnership,
apply to the court to wind up the business and affairs of the
firm.
42. Apportionment of premium where partnership prematurely
dissolved.
Where one partner has paid a premium to another partner on entering into
a partnership for a fixed term, and the partnership is dissolved before the
expiration of that term otherwise than by the death of a partner, the court
may order the repayment of the premium or of such part of it as it thinks
just, having regard to the terms of the partnership contract and to the
length of time during which the partnership has continued, unless—
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(a) the dissolution is, in the judgment of the court, wholly or
mainly due to the misconduct of the partner who paid the
premium; or
(b) the partnership has been dissolved by an agreement containing
no provision for a return of any part of the premium.
43. Rights where partnership dissolved for fraud or
misrepresentation.
Where a partnership contract is rescinded on the ground of the fraud
or misrepresentation of one of the parties to it, the party entitled to
rescind is, without prejudice to any other right, entitled—
(a) to a lien on, or right of retention of, the surplus of the
partnership assets, after satisfying the partnership liabilities, for
any sum of money he or she paid for the purchase of a share in
the partnership and for any capital he or she contributed;
(b) to stand in the name of the creditors of the firm for any
payments he or she made in respect of the partnership
liabilities; and
(c) to be indemnified by the person guilty of the fraud or
making the representation, against all the debts and
liabilities of the firm.
44. Right of outgoing partner in certain cases to share profits
made after dissolution.
(1) Where a partner has died or ceased to be a partner and the
surviving or continuing partners carry on the business of the firm with
the firm’s capital or assets without any final settlement of accounts as
between the firm and the outgoing partner or his or her estate, then,
in the absence of any agreement to the contrary the outgoing partner
or his or her estate is entitled, at the partner’s option or that of his or
her representatives—
(a) to a share of the profits made since the dissolution as the
court may find to be attributable to the use of his or her
share of the partnership assets; and
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(b) to interest at the prevailing treasury bill rate.
(2) Notwithstanding subsection (1), where the partnership contract
gives an option to surviving or continuing partners to purchase the
interest of a deceased or outgoing partner and that option is duly
exercised, the estate of the deceased partner or outgoing partner or his or
her estate is not entitled to any other share of the profits.
(3) Where a partner purporting to act in exercise of the option given
under subsection (2) does not in all material respects comply with its
terms, he or she is liable to account as provided in this section.
45. Retiring or deceased partner’s share to be a debt.
Subject to any agreement between the parties, the amount due from
continuing or surviving partners to an outgoing partner or the
representatives of a deceased partner in respect of the outgoing or
deceased partner’s share is a debt accruing at the date of the
dissolution or death.
46. Rules for distribution of partnership assets on final
settlement of accounts.
In settling accounts between or among the partners after dissolution
of a partnership, the following rules shall, subject to any agreement,
be observed—
(a) losses, including losses and deficiencies of capital shall be
paid, first out of profits, next out of capital, and lastly, if
necessary, by the partners individually in the proportion in
which they were entitled to share profits;
(b) the assets of the firm, including the sums, if any, contributed
by the partners to make up losses or deficiencies of capital,
shall be applied in the following manner and order—
(i) in paying the debts and liabilities of the firm to
persons who are not partners in it;
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(ii) in paying to each partner, rateably, what is due from
the firm to the partner for advances as distinguished
from capital;
(iii) in paying to each partner, rateably, what is due from
the firm to the partner in respect of capital;
(iv) the ultimate residue, if any, shall be divided among the
partners in the proportion in which profits are divisible.
P
ART VI—LIMITED LIABILITY PARTNERSHIPS.
47. Limited liability partnership.
(1) A limited liability partnership may be formed in the manner
prescribed by this Act.
(2) A limited liability partnership shall consist of not more than
twenty persons, and shall have one or more persons called general
partners who shall be liable for all debts and obligations of the firm.
(3) A limited liability partnership shall, in addition to general
partners have one or more persons called limited liability partners who
shall contribute a stated amount of capital to the firm, and shall not be
liable for the debts or obligations of the firm beyond the amount of
capital so contributed.
(4) A limited liability partner shall not, during the continuance
of the partnership, either directly or indirectly, draw out or receive
back any part of his or her contribution to the partnership, and if a
limited liability partner draws out or receives back any part of his or
her contribution, he or she shall be liable for the debts and obligations
of the partnership up to the amount so drawn out or received back.
(5) A body corporate may be a limited liability partner.
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48. Registration of limited liability partnership.
(1) A limited liability partnership shall, subject to subsection (2),
be registered with the Registrar in accordance with section 50; and a
limited liability partnership that is not so registered shall be taken to
be a general partnership and all its members’ general partners.
(2) A partnership registered as a limited liability partnership
under section 50 shall, at the end of its name, add the letters “(LLP)”.
49. Reservation of name.
(1) The Registrar may, on written application under the Business
Names Registration Act, reserve a name pending registration of a
limited liability partnership.
(2) The name reserved under subsection (1) shall remain in force
for thirty days or such longer period, not exceeding sixty days, as the
Registrar may, for exceptional reasons permit.
(3) During the period when the name is reserved under
subsection (2), the Registrar shall not register any other business with
the name so reserved.
(4) The Registrar shall not reserve a name or register any
partnership which, in the opinion of the Registrar, is undesirable or
deceptive.
50. Particulars of registration of limited liability partnership.
(1) The registration of a limited liability partnership shall be
effected by delivering to the Registrar a statement signed by the
partners containing the following particulars—
(a) the name of the limited liability partnership;
(b) the general nature of the limited liability partnership’s
business;
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(c) the principal place of business of the limited liability
partnership;
(d) the full names and address of each of the partners;
(e) the term, if any, for which the limited liability partnership
is entered into, and the date of its commencement;
(f) a statement that the partnership is limited;
(g) a description of the status of each partner, limited or
general; and
(h) the sum contributed by each partner and the form in which
it is so contributed.
(2) The Registrar shall, upon receiving the particulars referred to
in subsection (1) and the prescribed fee for the registration, issue a
certificate of registration of the limited liability partnership.
51. Registration of change in particulars of limited liability
partnership.
(1) Where, during the continuance of a limited liability
partnership any change is made or occurs in—
(a) the name of the partnership;
(b) the general nature of the business of the partnership;
(c) the principal place of business of the partnership;
(d) the partners or the name and address of any partner;
(e) the term or character of the partnership;
(f) the sum contributed by any limited liability partner;
(g) the liability of any partner by reason of his or her becoming
a limited liability partner instead of a general partner or a
general partner instead of a limited liability partner; or
(h) the number of shares held by each partner,
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a statement signed by the firm, specifying the nature of the change
shall, within ten days, be delivered to the Registrar for registration,
and the Registrar shall issue a certificate of change in particulars to
the firm.
(2) A limited liability partnership which contravenes of
subsection (1) commits an offence, and each general partner shall, on
conviction, be liable to a fine not exceeding 0.5 currency points for
each day during which the contravention continues.
52. Management of limited liability partnership.
(1) A limited liability partner shall not take part in the
management of the partnership business and shall not bind the firm.
(2) Without prejudice to subsection (1), a limited liability partner
may, upon giving seven days notice to the general partners, in person
or by that partner’s agent, inspect the books of the firm and ascertain
the state and prospects of the partnership business.
(3) Where a limited liability partner takes part in the
management of the partnership business, that partner shall be liable
for all debts and obligations of the firm incurred while he or she takes
part in the management as though he or she were a general partner.
(4) For the purposes of this section, a limited liability partner
does not participate in the management and control of the partnership
business solely by doing one or more of the following—
(a) being a contractor for or an agent or employee of a limited
liability partnership or of a general partner, or being an
officer, director or shareholder of a general partner in the
limited liability partnership, which is a corporation;
(b) consulting with and advising a general partner with respect
to the business of the limited liability partnership;
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(c) acting as surety for the limited liability partnership or
guaranteeing or assuming one or more specific obligations
of the limited liability partnership; or
(d) exercising a right or power permitted by or under this Act
or which a shareholder in a company may exercise.
(5) A limited liability partnership shall not be dissolved by the
death or bankruptcy of a limited liability partner, and the mental
incapacity of a limited partner shall not be a ground for dissolution of
the partnership by the court unless the contribution of the limited
liability partner who is mentally incapacitated cannot otherwise be
ascertained and realised.
(6) In case of the dissolution of a limited liability partnership, its
affairs shall not be wound up by the general partners unless the court
directs otherwise.
(7) Subject to any agreement express or implied between or
among the partners—
(a) any difference arising as to ordinary matters connected with
the partnership business may be decided by a majority of
the general partners;
(b) a limited liability partner may, with the consent of the
general partners, assign his or her contribution in the
partnership, and upon such assignment, the assignee shall
become a limited partner with all the rights of the assignor;
(c) partners shall not be entitled to dissolve the partnership by
reason of any limited liability partner suffering his or her
contribution to be charged for his or her separate debt;
(d) a general partner may be introduced as a limited liability
partner without the consent of the existing limited liability
partners; and
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(e) a limited liability partner shall not be entitled to dissolve
the partnership by notice.
53. Winding up of limited liability partnership.
(1) Subject to this Part, a limited liability partnership may be
wound up under this Act, and all the provisions of this Act relating to
winding up shall apply to a limited liability partnership with the
exceptions and modifications provided for in this section.
(2) A limited liability partnership shall not be wound up under
this Act, voluntarily or subject to the supervision of the court.
(3) The circumstances in which a limited liability partnership
may be wound up are—
(a) if the partnership is dissolved, or has ceased to carry on
business, or is carrying on business only for the purpose of
winding up its affairs;
(b) if the partnership is unable to pay its debts; or
(c) if the court is of the opinion that it is just and equitable that
the partnership should be wound up.
(4) A limited liability partnership shall, for the purposes of this
Act, be deemed to be unable to pay its debts—
(a) if a creditor, by assignment or otherwise, to whom the
partnership is indebted in a sum exceeding one hundred
currency points then due—
(i) has served on the partnership by leaving at its
principal place of business; or
(ii) by delivering to a general partner; or
(iii) by otherwise serving in such manner as the registrar
may approve or direct,
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a demand under his or her hand requiring the partnership to pay the
sum so due, and the partnership has, for thirty days after the service
of the demand neglected to pay the sum or to secure or compound for
it to the satisfaction of the creditor;
(b) if an action has been instituted against a partner for a debt
due from the partnership and notice in writing to that effect
has been served on the partnership, in the manner
prescribed in subsection(4)(a) and the firm has not within
fourteen days after service of the notice paid, secured or
compounded for the debt or demand, or procured the action or
proceedings to be stayed or indemnified the defendant to his or
her reasonable satisfaction against the action or proceeding, and
against all costs, damages and expenses to be incurred by him
or her by reason of the action or proceedings;
(c) if execution or other process issued on a judgment, decree
or order obtained in any court in favour of a creditor against
the firm or any person authorised to be sued as nominal
defendant on behalf of the firm is returned unsatisfied; or
(d) if it is otherwise proved to the satisfaction of the court that
the firm is unable to pay its debts.
54. Notice of arrangement or transaction to be advertised in
Gazette.
Notice of any arrangement or transaction under which a general
partner becomes a limited partner, or under which the contribution of
a limited partner in the firm is assigned to any person shall
immediately be advertised in the
Gazette before any such
arrangement or transaction comes into effect.
55. Inspection.
(1) A person may inspect the statements filed with the Registrar
by a limited liability partnership under this Act upon payment of a
fee, not exceeding 0.5 of a currency point as the Minister may
prescribe.
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(2) A person may obtain a certified copy of the certificate of
registration of a limited liability partnership or an extract of the
certificate from the registered statement of a limited liability
partnership, upon payment to the Registrar of a certification fee, not
exceeding one currency point, as the Minister may prescribe.
56. Conversion of partnerships.
(1) A limited partnership may be converted into a general
partnership by surrendering the certificate of its registration to the
Registrar for cancellation.
(2) The Registrar shall, within fourteen days after the surrender
of a certificate of registration under subsection (1), publish the
conversion in the
Gazette.
(3) A limited partner who becomes a general partner after the
conversion shall continue to be liable for any obligation incurred by
the limited liability partnership before the conversion took effect; and
shall be liable for any obligations of the general partnership that are
incurred by the general partnership after the conversion.
(4) A general partnership may, subject to the provisions of this
Act, convert to a limited liability partnership under this Act by
delivering to the Registrar a statement containing the particulars
specified in section 51.
(5) The Registrar shall, upon receipt of the statement delivered
under subsection (4), and upon payment of the prescribed fee, issue a
certificate of registration to the person or firm delivering the statement.
(6) A general partner who becomes a limited liability partner
shall, after the conversion to a limited partnership, continue to be
liable for any obligations incurred by the general partnership before
the conversion.
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57. Effect of conversion on pending court action.
Conversion from one form of partnership to another under this Act
shall not affect any action or proceedings pending in court for or
against the converting partnership; and the action or proceedings may
be continued as if the conversion did not take place.
58. Winding up of partnership.
The provisions of the law relating to the winding up of an
unregistered company under the Companies Act shall apply, with
necessary modifications, to the winding up of a partnership under this
Act.
59. Postponement of share of profits in case of bankruptcy.
Where—
(a) a person to whom money has been advanced by way of a
loan upon a contract as mentioned in section 3 (c) (iv); or
(b) a buyer of goodwill in consideration of a share of the profits
of the business,
being adjudged a bankrupt, enters into an agreement to pay his or her
creditors less than one-fifth of one currency point, or dies insolvent,
the lender of the loan shall not be entitled to recover anything in
respect of the loan, and the seller of the goodwill shall not be entitled
to recover anything in respect of the share of profits contracted for,
until the claims of the other creditors of the borrower or buyer for
valuable consideration in money or money’s worth have been
satisfied.
P
ART VII—MISCELLANEOUS
60. Existing rules applicable to partnerships.
The rules of equity and common law applicable to partnerships
shall be deemed to apply to partnerships in Uganda, except insofar as
they are inconsistent with this Act.
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61. Regulations.
(1) The Minister may, by statutory instrument, make regulations
prescribing any of the following—
(a) the fees to be paid for anything required to be done under
this Act;
(b) forms to be used for the purposes of this Act; and
(c) generally prescribing all matters that are required or
permitted by this Act to be prescribed, or that are necessary
or convenient to be prescribed for carrying out or giving
effect to this Act.
(2) Notwithstanding the Interpretation Act, regulations made
under this section may prescribe, in respect of a contravention of the
regulations, that the offender is liable
on conviction a fine not
exceeding forty eight currency points, or to imprisonment for a term
not exceeding two years, or both.
62. Amendment of Schedule
The Minister may, by statutory instrument with the approval of the
Cabinet, amend the Schedule to this Act.
63. Repeal of Cap. 114
The Partnership Act, Cap. 114, is repealed.
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SCHEDULE
Sections 1 and 63.
Currency Point
One currency point is equivalent to twenty thousand shillings.
Cross References
Business Names Registration Act, Cap.109
Companies Act, Cap. 110
Interpretation Act, Cap. 3
Partnership Act, Cap. 114.
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