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Right to Return of Capital Contribution

15 January, 2016 - 09:35

When a partner joins a partnership, she is expected to make a capital contribution to the firm; this may be deducted from her share of the distributed profit and banked by the firm in its capital account. The law provides that “the partnership must reimburse a partner for an advance of funds beyond the amount of the partner’s agreed capital contribution, thereby treating the advance as a loan.” 1 A partner may get a return of capital under UPA after creditors are paid off if the business is wound down and terminated. 2