Definition of Nominal Partner
The Nominal Partner is an individual who is not a part-owner and not actively involved in the firm’s operations. They are often well-known figures who lend their name to the company for a fee.
Who is the Nominal Partner in the Partnership?
A nominal partner lends their name to a firm but has no genuine interest or an active role in management decisions. The firm can use his name to promote sales or obtain credit.
A nominal partner is not responsible for sharing profit and losses because they do not contribute capital. However, they are still liable to third parties for the actions of other partners.
We can define a nominal partner as a limited or ostensible partner with no business interest or profit involvement.
Partnerships are a powerful way to bring together individuals with different skills and strengths to build a successful business. Nominal partners are essential to this equation, lending credibility and support without necessarily being involved in day-to-day operations. Their willingness to put their name behind the venture is a testament to the strength of the partnership and its potential for success.