What Is A Partnership And What Is The Procedure To Draft And Register A Partnership Deed?

A partnership deed's aim is to give a clear understanding of the positions of the partners, ensuring that the firm's operations function smoothly. The partnership deed comes into the picture when there is a result of collaboration among the partners.

This document is extremely important, and it can even be used as a legal document if the firm finds itself in a courtroom. Because a Partnership Deed, also known as a Partnership Agreement, is registered under the Indian Registration Act 1908, there is no possibility of the Deed of Partnership being destroyed while in the partners' possession.

Additionally, registering the partnership deed has various advantages, including making the organization eligible for a PAN, opening a bank account, and assisting in the registration of GST or an FSSAI license in the name of the organization.

• Active or Working Partner - An active partner is an invested person who is involved in the daily operations of the partnership.
• Based on Partnership Registration Status - It is of two types Unregistered Partnership Firm and Registered Partnership Firm.
• Dormant or Sleeping Partners - This partner does not participate in the day-to-day functioning activities of the partnership firm.
• General Partnership - A general partnership is a form of partnership in which the partners are all liable for the activities of the partnership.
• Limited Liability Partnership (LLP) - Limited liability partnerships (LLPs) are a type of partnership in which each partner's liability is limited to the amount invested in the company.

Essentials of a Partnership Deed

• The company's name.
• All partners' names and contact information.
• The nature of the company.
• The partnership's duration or tenure.
• The quantity of funds each partner has contributed.
• Every partner's ability to produce drawings
• The maximum interest rate that can be applied to both capital and drawings.
• Partners' rights.
• Partners' responsibilities
• Partners' remuneration.
• The procedure for determining goodwill.
• Ratio of profit and loss sharing

Contents of a Partnership Deed

1. The name of the firm is selected by all partners
2. Names and contact details for all partners.
3. The beginning of a company's operations and the length of its life.
4. The duration of the company's existence.
5. The amount of money invested by each partner.
6. The profit-sharing ratio between the partners.
7. Obligations, liabilities, and authority of each business partner.
8. A partner's income and, if required, a commission paid.
9. The procedure for joining or retirement of a partner.
10. The method for assessing goodwill.
11. In the event of a partner dispute, the procedure that must be followed.
12. The procedure to be followed in case that one of the partners becomes bankrupt.
13. The procedure to be followed in the event of a company's liquidation.

The Procedure for Registering a Partnership Deed:

Although a partnership deed is not required, it is recommended since it helps to define each business partner's rights, responsibilities, and obligations. The Indian Partnership Act of 1932 has no time limit for registering a partnership firm. The company can be registered at the moment of its formation or after it has begun, depending on the approval of all partners. The procedure is as follows:

1. Form A application to the Registrar of Firms with all pertinent information about the business has to be submitted;
2. The registrar must receive a signed copy of the agreement that details all of the rules and policies.
3. Pay the affidavit fee, stamp duty, and additional fees that are required;
4. The firm name is added to government records when the registrar approves the registration application, and the partners can pick up the incorporation certificate.

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