Question

Distinguish between a secret partner and nominal partner?

Answer 1

(i) Meaning: A secret partner is one whose association with the firm is unknown to the general public, whereas a nominal partner is one who allows the use of his name by a firm.

(ii) Capital contribution: A secret partner contributes capital but a nominal partner does not contribute capital of into the firm.

(iii) Participation in management: A secret partner participates in management but secretly. On the other hand, a nominal partner does not participate in management.

(iv) Sharing of profits/ losses: A secret partner shares profits and losses whereas a nominal partner does not.