Partnership Deed

A Partnership Agreement is an agreement between two or more individuals who would like to manage and operate a business together in order to make a profit. It is a relatively common business structure in India, and can be contrasted to other common business structures such as a sole proprietor, a company or a trust.

In a partnership, several partners are able to work together (unlike a sole proprietor). Each partner shares a portion of the partnership’s profits and losses and each partner is personally liable for the debts and obligations of the partnership.

Compared to a company or a trust, a partnership can have lower set up and administration costs. However, while companies and trusts offer some protections against liability, a partnership does not. A partnership is not a separate entity from the partners. If the partnership incurs a liability, the partners are personally responsible for it. Furthermore, a partner can become liable for debts that another partner has incurred on behalf of the partnership.
Nevertheless, a partnership is a cheap and convenient way for a several people to go into business together, and is a popular business structure for many Indians. And an important step in getting the partnership established, is to make a written record of the agreement between the partners, by using this Partnership Deed.
This Partnership Deed describes the partner responsibilities, outlines the ownership interest in the partnership, defines the profit and loss distribution of each partner, prepares the partnership for common business scenarios, and includes other important rules about how the partnership will be managed and conduct business.
The document is a critical foundational document for running a new business and sets the business up for success by ensuring clear communication and defined responsibilities for all of the partners. This Agreement documents both contingency plans for when things go wrong as well as descriptions of the partnership’s day-to-day operations. A Partnership Deed protects all of the partners involved in the business and any individuals who plan to do business together should complete a Partnership Deed.

COMPONENTS

PARTNERSHIP NAME

The legal name under which the partnership will do business.

PURPOSE OF THE PARTNERSHIP

A brief description of the business that the partnership will conduct.

PARTNER INFORMATION

The legal names and addresses of all of the partners currently involved in the partnership.

CAPITAL CONTRIBUTIONS

A description of the cash, property, services, and other resources initially contributed to the partnership by each of the partners.

OWNERSHIP INTEREST

A description of the percent of the partnership owned by each of the partners .

PROFIT/LOSS DISTRIBUTION

A description of how the profits and losses of the partnership will be distributed between the partners, often based on capital contributions and/or ownership interest , and how often distribution will take place.

MANAGEMENT AND VOTING REQUIREMENTS

A description of how the partnership will be managed, how voting weight will be determined, and whether unanimous or majority votes will be required to make important decisions about the finances and operations of the partnership

PARTNER ADDITION AND WITHDRAWAL

The guidelines for how the partnership will handle the addition of partners, the voluntary withdrawal of partners, and the involuntary withdrawal of partners.

PARTNERSHIP DISSOLUTION

An outline of the circumstances under which the partnership can be dissolved and a description of how the remaining assets of the partnership will be divided between the partnership if the partnership is dissolved . The Deed also includes the ability to define management roles within the partnership if the partners wish to do so. Once the Partnership Deed is completed, all of the partners should sign and date the Deed. Each partner's signature should be witnessed by an independent adult, meaning somebody over 18 years old, who is not involved with the partnership. This means the partners cannot witness each other, and people closely connected to the partners (such as their respective spouses) should not act as witnesses either. The partners should keep copies of the Deed for their records. If the partners wish to change any of the terms of the Agreement, they should be sure to do so in writing.

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    Company Registration

    Process

    According to the India Partnership Act 1932, there is no time limit as such for the registration of a firm. The firm can be registered on the date when it is incorporated or any such date after so. The requisite fees and fines must be paid. The procedure for such a registration is as follows,

    • Application to the Registrar of Firms in the prescribed form (Form A). Nowadays this facility is even available online. Such an application must contain certain basic details about the firm such as,
      • Name of the Partnership Firm
      • Name and address of all partners
      • Place of business (address of main and branch offices)
      • Duration of the partnership
      • Date of joining of partners
      • Date of commencement of business
    • The duly signed copy of the Partnership Deed (which contains all the terms and conditions) must be filled with the registrar
    • Deposit/pay the necessary fees and stamp duties
    • Once the registrar approves the application, the firm will be entered into the records. And the registrar will also issue a certificate of incorporation.

    And this is how the process of registration will be completed and the firm will attain legal recognition

    FREQUENTLY ASKED QUESTIONS

    A document containing an agreement that details the rights and obligations of each partner participating in a venture. For example, a deed of partnership could specify how proceeds from the partnership’s business are to be divided among the partners.

     

    No, it is not necessary. As the contract act does not makes it necessary to have the agreement in writing. However, it is always prudent to make a partnership deed to produce to the bank, income tax authorities and to clients with whom the partnership firm deals with. Apart from serving as a reference document a written partnership deed also helps in reducing conflict and confusion in due course of time.

     

    Registration of Partnership. As per the Partnership Act 1932, it is not compulsory to register a partnership firm. The firm does not have a separate legal identity and registration will not alter this fact. … So it is always advisable to draw up a written partnership deed and register the firm with the Registrar of Firms

     

    In India, there is no need to register a partnership deed. This is the short answer, as specified under part VII of the Indian Partnership Act, 1932. However, as you would expect, it isn’t the end of the topic if you’re looking to start a partnership firm.

     

    This deed, notarized on a Non-Judicial Stamp paper with minimum value of Rs. 200 or more and signed by all partners, is ‘THE’ charter or blueprint of the firm. … There is one more legal requirement – a separate PAN card from Income Tax Department in the name of the firm (as mentioned in your Certificate of Registration)