Partnership Deed : Meaning, Format and Registration

February 15, 2022
Registrationwala

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Partnership Deed : Meaning, Format and Registration

Partnership Deed : Meaning, Format and Registration

February 15, 2022

Registrationwala

The partnership firm is one of the oldest and most popular business structures in India. While companies are governed by the Companies Act, 2013, and limited liability partnerships are governed by the Limited Liability Partnership Act, 2008, partnership firms continue to be governed by the colonial-era Indian Partnership Act, 1932, with amendments made from time to time.

In a partnership firm, the deed of partnership is of utmost value. But what exactly is this deed? What is its format? How can it be registered? In this blog post, we will answer all these questions.

What is Partnership Deed?

Partnership deed meaning can be explained as a written agreement between the partners of a partnership firm that clearly sets out their respective rights, duties and obligations. This deed may be registered at the option of the partners. There is no law mandating the registration of a partnership deed agreement; however, it is highly recommended.

Why is it recommended? Because this document clearly defines the rights, duties and obligations of each partner and helps avoid confusion. In the event of any legal dispute, the deed of partnership serves as valid evidence.

Components of Partnership Deed

The following are the components of partnership deed:-

Details of Firm & Partners:- Unanimously agreed name and address of partnership firm, along with names and addresses of all the partners that make up the firm.
Details Regarding the Firm’s Business:- The deed contains details regarding the business that the firm is engaged in.
Commencement & Duration Details:- The deed outlines the date on which the business officially starts and specifies whether it is for a fixed term, for a specific project, or at the will of the partners.
Capital Contributions:- In the deed, the individual contributions made by the partners is contained.
Ratio of Profit/Loss Sharing:- The deed specifies the profit/loss sharing ratio agreed upon by the partners.
Commissions and Salaries:- The partnership agreement mentions the salaries and commissions withdrawn by partners on the basis of their roles and capabilities.
Loans:- It outlines the terms of business loan, the partner borrowing options and collateral.
Roles & Authority of Firm Partners:- The document clearly states the duties, responsibilities and authority each partner has at the firm.
Calculation of Goodwill:- It contains a defined method for calculation of the goodwill of the firm.
Guidelines for Insolvency:- The deed contains the guidelines for handling the insolvency of a partner.
Mechanism for Dispute Resolution:- It provides a structured procedure for resolving disputes that may arise between partners of the firm.
Admission, Retirement and Death:- It contains the procedure for admitting a new partner or dealing with retirement/demise of a partner.
Settlement of Financial Accounts:- The deed contains a systematic approach for settlement of financial accounts during the dissolution of the partnership.

Partnership Deed Format

The deed of partnership format for two partners is as follows:-

Source:- Institute of Company Secretaries of India

Partnership Deed Documents Required

To register a deed of partnership, the following documents are required:-

Original Deed of Partnership.
Form No. 1 (Application for Registration).
PAN Card of the Firm.
NOC from landlord, in case of rented premises.
Address Proof of Firm (rent/lease agreement for rented premises or ownership proof like latest utility bills).
Affidavit confirming all the information provided is true and correct.

How to Register a Partnership Deed in India?

To register a deed of partnership in India, you need to follow the steps explained below:-

Step 1:- First, you need to draft a deed of partnership on non-judicial stamp paper and have it signed by all the partners of the firm. Make sure all the necessary details are mentioned in the deed.

Step 2:- Then, you must schedule an appointment with the sub-registrar or registrar office. The deed must be registered and notarized in the presence of the witnesses. It is important to note that the witnesses must also sign the document.

Step 3:- Then, you must submit the deed along with all the required documents to the registrar of the firm. Make sure all the documents are legible and up-to-date.

Step 4:- Finally, obtain the registration certificate from the registrar.

Conclusion

A deed of partnership is a crucial document for a partnership firm. It outlines the firm and partners’ name, address, business details, key responsibilities and roles of the partners, salaries and commissions, etc. While registering this deed isn’t mandatory, it is highly recommended. To register it, you must draft it on a non-judicial stamp paper, have it signed by all the partners and witnesses and notarized. You must subsequently file the deed with the registrar of firms along with all the required documents.

Need assistance in partnership firm registration? Connect with our consultants at Registrationwala.

Frequently Asked Questions (FAQs)

Q1. Is partnership deed registration mandatory in India?

A. No, not at all. There’s no legal requirement to even write a deed of partnership, let alone register it. It is a completely voluntary option. However, even then, registration is highly recommended to prevent misunderstandings, disputes and unnecessary legal complications among the partners.

Q2. What is meant by partnership deed?

A. A partnership firm deed is a written agreement between the partnership firm’s partners. It clearly sets out their respective rights, duties and obligations. Having this deed is completely optional but highly recommended.

Q3. Which partnership deed form is required to register a partnership firm deed?

A. To register a deed of partnership, you require Form No. 1 (Application for Registration). You must file this form, along with other required documents, with the Registrar of Firms (RoF).

Q4. What are the contents of partnership deed?

A. The partnership deed’s contents include firm and partner name and address details, commencement and duration of firm, business operation details of firm, roles and responsibilities of partners, mechanism for dispute resolution, ratio of loss/profit sharing between partners and partners’ capital contribution among others.

Q5. What is partnership deed registration fees?

A. The fee is not fixed. It varies depending on the state where the firm is registered and the total capital contribution of the partners. Apart from government fees for registration, you have to pay for stamp duty as well. If you seek assistance from a legal professional, then they’ll charge you for their services.