Legal Environment of Business ASSIGNMENT

Legal Environment of BusinessASSIGNMENT (4)Chapter 37 – Termination of PartnershipLast Date for submission is 19 / 11 / 2015thGeneral InstructionsYou are requested to respond to this question individually. Any suspicious activities willresult in not having your assignment gradedAfter completing your assignment save your answers in a WORD format and attached itto the appropriate place in your blackboard.Assignment on PDF will NOT be graded.Sara, Nada, and Maha are partners in The Innovation Co. (the “Company”) a generalpartnership that was working in the retail business. Sara and Nada contributed in theCapital of the company by SR. 10,000 each, while Maha’s contribution was SR. 5,000.The Partnership Agreement provided for “equal contribution of management to eachpartner as well as equal share of profits”. During the first 5 years the Company wasdoing very well, so the partners decided to expand the operation of the Company and theyagreed that they need more funds in order to do that. Therefore, Sara suggested giving thecompany SR. 5000 as a loan and the other partners agreed. However, because Sara’s loanwas not enough for the expansion plans, the partners decided to get a loan from a bank.Consequently, they received SR. 50,000 from National Commercial Bank (“NCB”)After securing all the funds they needed, the partners started executing their expansionplans. The plans proved to be a success and they were able to make good profits.5 years later Sara, Nada and Maha disagreed on an issue regarding the operation of theCompany, and after exhausting all their efforts to fix the problem, they agreed to dissolvethe Company and wind up the business.How should the partners distribute the Company’s assets in accordance with the law?Putting in mind the following:1. Company already made SR. 20,000 of payment on their NCB loan by time ofdissolution.2. Company’s net profit at time of dissolution is SR. 200,000.State the Rule of law that governs distribution of assets when winding up a generalpartnership and explain in details how you are going to distribute the Company’s assets.