Can a partner utilize his stake in the firm to raise finance?
It is common to offer valuable assets, such as jewellery, or shares in a company, as security for raising finance. Under Section 29 of the Partnership Act, a partner may transfer his interest in the firm by mortgage, creation of a charge on such interest. However, the transferee cannot interfere in the conduct of the business, or to require accounts, or to inspect the books of the firm, but entitles the transferee only to receive the share of profits of the transferring partner. The transferee must accept the account of profits agreed to by the partners.