Asked April 26, 2017

Investment in friend's business

  • 3 Answers

My friend has a business idea. I wish to invest in it but he has made all the related licenses in his wife's name. Also he says that he doesnt have any money to invest, I will have to invest 100% and he will give me profit through it. My concern is what if some mishaps happen in future or he takes back his words, what will happen to the money that I am planning to invest and how will my share in te business be established? Please suggest.




Answers 3

make an agreement with his wife and take gurantee of your friend.

if any mishap will happen what will be the next step.

take all note on paper and make agreement and registered it.

Agree Comment 0 Agrees over 4 years ago




Dear Sir/madam,

In law, there is a concept of a Silent Partner and an Active Partner. And this is one typical case of the same. Things like this are pretty common in business setups. Silent Partner is one who one invests in the business and does not participate otherwise i.e. in terms of management or the daily operations of the said business. As per the current situation, you will be considered as the Silent Partner of the business venture that you plan to establish. Therefore, do take care of becoming partner of the establishment while signing the documents. Your liability will also be limited and in proportion to the amount that you have invested in the business.

Your friend (with the idea) will be the General / Active Partner in the business. One who takes care of the management and operations of the company or the firm, so established. Also, the active partner is held responsible for the wrongful acts of the firm.

Therefore, enter into a Partnership agreement mentioning all the terms and conditions of the contract. These will include your investment participation and the percentage of profit that you are liable to earn. Doing this, will protect your interest legally, in the firm. Plus, your share in the profit is your legal right, why should you rely on someone else to give you your own share. To know further about the rights and liabilities of partners in a partnership firm – do have a look at The Indian Partnership Act, 1932.

Agree Comment 0 Agrees over 4 years ago

you should invest if the idea is good, I don't understand what is the business who is the owner of such business, it's it company he proposed to form and asks you to invest, what is the role of wife and license. Your question is vague and incomplete 

Anyways investment paper will be signed by the owner of the business or asset in your case.

Agree Comment 0 Agrees over 4 years ago

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