Partnership deeds outline the terms and conditions of a company’s or organization’s partnership between its partners. In a partnership agreement, all partners’ roles are clearly defined, and the company’s operations run smoothly.
- Among the partners, there is an outcome of agreement.
- It is possible to enter into an oral or written agreement.
- Under partnership law, there is no requirement for a written contract. “Partnership deeds” are documents that contain the terms and conditions of a partnership.
- Typically, these include all properties that affect the relationship between partners, such as transactional objectives, capital contributions, profit and loss split ratios, and partner privileges. The interest earned on loans, capital investments, etc.
Deed of Partnership Registration
A partnership company does not need to be registered under the Partnership Act 1932. Registration does not change the fact that the company has no legal personality. A company’s registration, however, proves its legality and existence.
There are real legal repercussions for the partner and the company if a company isn’t registered. The incorporation of a company in the trade register should always be accompanied by written basic articles of incorporation. Unless you do this, the following will happen:
- Any third party cannot be sued by the firm. The firm cannot sue the client for not paying his dues if it is not registered, for example.
- It is impossible for an unregistered firm to fail a case against a partner if the partner mismanaged the firm, stole, or committed fraud.
- In an unregistered firm, one partner cannot sue another.
Partnership Deed Registration Procedure
Registration of a firm is not subject to a time limit under the India Partnership Act 1932. An incorporation date or a later date can be used for registering the company. In addition to the required fees and fines, there must be payment of the fines. In order to register for such a service, follow these steps:
- The prescribed form (Form A) must be submitted to the Registrar of Firms. It is even possible to access this service online nowadays. Among the details that must be included in such an application are:
- Identify the partnership firm by its name
- Partners’ names and addresses
- Location (address of main office and branches)
- The duration of the partnership
- The date when partners joined
- Business commencement date
- To register the Partnership Deed, the duly signed copy (which contains all the terms and conditions) must be submitted to the registrar
- Ensure that the necessary fees and stamp duties are deposited/paid
- The firm will be entered into the records once the registrar approves the application. A certificate of incorporation will also be issued by the registrar. In this way, the registration process will be completed and the firm will be recognized legally.
Check here: Partnership Deed Format
Deed of Partnership Benefits
The partnership deed can be oral, but it must be written. Oral agreements have the disadvantage of being worthless for tax purposes, and they can’t be used as legal documents when disputes arise. A written partnership agreement is therefore desirable.
- In case of a dispute, it allows business owners to sue in court.
By establishing all the terms and conditions in advance, it helps avoid any misunderstandings or conflicts among business owners.
- Every partner’s responsibilities are clearly outlined.
- By providing details about the profit/loss ratio, misunderstandings can be avoided.
- The amount invested by each partner is mentioned.
- It also details the salary and commissions paid to partners, as well as the interest that will be charged if any partners withdraw their capital.
Fees associated with the registration of partnership deeds
Partners in a business need to pay the following registration fees to register a partnership deed:
- In addition to paying the court fee of Rs 3, partners must pay for an affidavit made on a non-judicial stamp paper priced at Rs 10 each.
- Charges for stamp duty vary from state to state, and must be included in the registration fee. Generally, the stamp duty on a partnership deed in Delhi is 200 rupees, while in Mumbai it is 500 rupees. States charge different stamp duty rates, which can range from 200 to 10,000 rupees.
Also, read: What Is Partnership Deed
Partnership Firm Documents Required
Registration for a partnership deed requires a set of documents. To form a partnership, you will need the following documents:
- PAN cards of all partners
- Form 1 – Application
- All partners’ signatures on the partnership deed
- The firm’s PAN
- All partners must provide proof of their addresses
- Proof of the organization’s address
- A notarized affidavit of acknowledgment.
- Each partner’s photograph
The partnership deed must be registered by an official authority.
Process for registering a partnership deed
It is not required to possess a partnership certificate, but it is recommended to do so since it helps regulate the rights, responsibilities, and obligations of each partner. Partnership companies are not subject to any specific registration period under the Indian Partnership Act of 1932. In the event of a company’s establishment, all shareholders must consent to its registration. As a step-by-step guide, here are the steps:
- A completed Form A with all the vital information about the firm should be submitted to the Registrar of Firms;
- All rules and policies specified in the agreement must be filed with the registrar;
- Payment of affidavit fees, stamp duty fees, and other essential charges;
- As soon as the registrar approves the registration application, the company name is entered into government records, and the incorporation certificate can be collected by the partners.
It is important to understand how the social contract comes into being before you can understand it. When two or more people start a new business, they form a partnership to share profits and losses. An agreement called a partnership certificate is also referred to as an “association certificate.” A partnership company, on the other hand, is a company that has its own name.