A dormant partner is a business partner who receives a portion of the profits but does not actively engage in managing the business. They may not be publicly recognized and may not have a say in decision-making. Nevertheless, they are still liable for any debts incurred by the business. It’s similar to being a silent investor in a lemonade stand – you receive a share of the profits without contributing to the production or sales.
In a business, a dormant partner is someone who shares in the profits but does not engage in the management of the business. They are also referred to as silent partners. For instance, John and Jane establish a restaurant business where John oversees the daily operations as the chef, while Jane invests money into the business but does not partake in the management. Jane is a dormant partner in the business, demonstrating how such a partner contributes financially to a business without actively running it.
A dormant partner is a partner in a business who does not actively participate in the day-to-day operations or management of the business.
Yes, a dormant partner can still be held liable for the actions of the business, as they are still considered a partner and share in the profits and losses of the business.
A dormant partner typically has the right to share in the profits and losses of the business, as well as the right to inspect the books and records of the business.
Yes, a dormant partner can be removed from the partnership if the other partners agree to do so, as long as it is in accordance with the partnership agreement or applicable laws.
Yes, a dormant partner still has the obligation to contribute their agreed-upon capital or resources to the business, as outlined in the partnership agreement.
It depends on the partnership agreement. If the agreement allows for it, a dormant partner may still receive a salary or compensation from the business, even if they are not actively involved in its operations.
Yes, a dormant partner can be held responsible for the debts and liabilities of the business, just like any other partner. Their liability is typically limited to their agreed-upon capital contribution.
Yes, a dormant partner can be held responsible for the actions of other partners if those actions were taken within the scope of the partnership’s business and in accordance with the partnership agreement.
Generally, a dormant partner cannot be held responsible for the actions of employees or agents of the business, unless they were directly involved in or had knowledge of those actions.
Yes, a dormant partner can become an active partner in the future if they choose to do so and the other partners agree. This can be done through an amendment to the partnership agreement.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
- Page URL:https://dlssolicitors.com/define/dormant-partner/
- Modern Language Association (MLA):Dormant Partner. dlssolicitors.com. DLS Solicitors. May 09 2024 https://dlssolicitors.com/define/dormant-partner/.
- Chicago Manual of Style (CMS):Dormant Partner. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/dormant-partner/ (accessed: May 09 2024).
- American Psychological Association (APA):Dormant Partner. dlssolicitors.com. Retrieved May 09 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/dormant-partner/
Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.
All author posts