When two or more than two individuals come together and make a new business entity, they enter into the agreement referred to as the partnership. When such an agreement obtains a written role, it is said to be known as a partnership deed. Let’s now look into the partnership deed, its format, importance, and specific clauses necessary for partnership firm registration in India.
Defining the partnership deed
It is a written legal document that specifies the rights and control of the partnership firm members, making the profits and losses and other important decisions and their repercussions crystal clear to each of the partners.
What are some of the details of such a partnership deed?
Here are some of the main elements of the partnership deed as given below;
Partnership and its co-owner’s name and address – the partnership deed includes the name by which the business would continue in the future.
The owners’ names and addresses – the partnership deed-also include all partners’ names and current addresses.
Nature of the business – the deed explicitly mentions the type of business it is going to be.
Firm’s address – the partnership deed should mention the location of all offices along with the head office.
Opening date and venue – it must explicitly indicate the time and place of opening of the business.
Business duration – the deed also includes the time duration of the partnership, whether for a fixed period or a project.
Capital contributed by the owners – the agreement should also include the amount of money each owner has contributed.
Profit-sharing ratio – it must mention the ratio of the profits earned pertaining to partners.
Audit details – the process of audit that would be carried out is also stated in the partnership deed.
Admission or retirement or demise of the partners – rules are pertaining to the entrance or resignation or demise of any partner in the firm in the deed.
The partners’ rights and responsibilities – the partnership deed also includes all the rights enjoyed by the partners and the specific duties to be carried out by them.
Settlement of accounts – the partnership agreement also includes the settlement of accounts if the firm undergoes the dissolution.
What is the purpose behind the creation of the partnership deed?
Being written in nature, the partnership agreement is very reliable than any other agreement. The importance of a deed can be put in the following points as given below;
– Being legal, this document offers well-defined and crystal-clear guidelines and rules for conducting the agreement.
– Limits the confusion due to its clarity in outlining all the specific details.
– In case of disputes or settlements, the deed makes the process of the events very lucid.
– The precise yet clear nature of the agreement makes each members’ role in the firm straightforward and unambiguous.
Benefits you will get from registering a partnership
Right to file a lawsuit – a registered firm receives the right to file in any situation in the judiciary.
Protecting the interest – in case of any disputes and concerns among the partners, a registered firm and its owners can rightfully claim their settlement.
Safeguarding the investors and creditors – a registered property will be safe from the creditors in case of debts if the company maintains its records.
Safeguarding the business and production – all the registered firms can get the benefits given by the government as they are registered under the government.
Bank loans – registered firms receive credits and loans from the banks effectively due to their nature.
What are some of the steps of drafting the partnership deed?
Draft agreement – the partners, require to choose the agreement offering all the firm’s relevant details and partners.
Obtaining E-stamp paper – buy the e-stamp paper of the prescribed amount and get the deed printed on it.
Sign the deed – obtaining the signatures of all the partners on all the pages of the act accepting the rules and regulations.
Getting the deed attested from the notary or getting it registered, it is up to partners whether they want the deed to be attested by the notary or want to get it registered.
What are the required documents for registering the partnership deed?
Here is the list of documents that one is obliged to submit to the sub-registrar while registering the partnership deed;
– Partners’ identity proofs.
– E-stamp paper of the prescribed amount.
– Aadhar numbers of all partners.
– Registration fee.
– Two passport photos of each business partner.