Meaning of Admission of a Partner

Meaning of Admission of a Partner:

Admission of a partner is one of the modes of the reconstitution of the firm under which old partnership comes to an end and the new partnership begins between all the partners including the incoming partner. Indian Partnership Act states that a new partner can be admitted only when the existing partners give their free consent for the same. So, when the existing partners of a firm permit a new person to join as their new partner, is called admission of the new partner. A new partner is admitted when the firm needs additional capital or managerial help or both for the expansion of the business.

Reasons for the admission of the new partner:

A new partner may be admitted in the partnership for the following reasons:

  1. To expand the business.
  2. To meet the requirements for the additional capital.
  3. To increase the managerial capabilities of the firm.
  4. To take the advantage of the reputation of the new partner.
  5. To reduce the competition.
  6. To avail the benefit of the technical skills of the new partner.