The Document Prepared In A Partnership Firm Is A Business Partnership Agreement Entered Between Two Or More Persons To Regulate The Business Responsibilities Within The Partnership Firm. A Deed Of Partnership Firm Is Generally Signed When The Parties Who Form The Partnership Firm Are Willing For The Registration Of A Partnership Firm, Not All Partners Register The Partnership Firm As With The Various Advantages Of Partnership Firm There Are Several Disadvantages Of The Partnership Firm As Well.
The Procedure Of Partnership Firm Registration And The Format For Partnership Agreement Along With Other Related Provisions, Rights, And Duties Are Provided Under The Indian Partnership Act,1932 Which Will Be Discussed Further In This Article Together With The Advantages And Disadvantages, Of Online Partnership Firm Registration, Features Of Partnership Firm, Effects Of Non-Registration Of Partnership Firm, Need And Importance Of Partnership Firm, Dissolution Of Partnership Firm, Reconstitution Of A Partnership Firm And So On.
Essentials and benefits of a Partnership Agreement
The Partnership Agreement In Business Shall Be Duly Signed By The Parties Starting A New Partnership And Shall Contain All The Necessary Details Required To Regulate The Business; The Name Of The Partners, Nature, And Purpose Of The Business To Be Undertaken, Location Of The Business, Contact Details Of All The Partners, The Duration And Type Of Partnership, The Ratio In Which The Profit/Loss Will Be Shared, Various Rules Regarding The Wealth Of The Firm, The Capital Each Partner Has Contributed In Making Of The Firm, Addition, And Removal Of The Partners In Future, Rules Regarding Tax And The Share In Ownership Are Some Non-Negotiables That Need To Be Included In The Partnership Deed.
Apart From These Various Other Rules And Regulations That The Parties Deem Necessary To Include To Ensure The Smooth Functioning Of The Business Can Be Included Such As The Remuneration Partners Are Entitled To, Various Shared And Specific Responsibilities Of The Partners To Eliminate Any Risk Of A Dispute Regarding Responsibilities, The Procedures That Need To Be Followed During The Audit, Rules Regarding Leave, Dispute Resolution Mechanisms, Etc. Some Partnership Agreement Examples Can Be General Partnership Agreement, Limited Partnership Agreement, Limited Liability Partnership Agreement, Etc.
A Partnership Agreement Gives A Clear Business Outline, Clearly Defines The Rights And Responsibilities, Profit And Loss Of All The Partners, Ensures To Some Extent That Disputes Do Not Arise, And In Case Disputes Arise Offers Resolutions. Singing A Partnership Agreement Is Not Compulsory But It Is Always Beneficial To Make One To Ensure The Smooth Functioning Of The Business.
Partnership Firm and its features
A Partnership Firm Is A Group Of Two Or More Persons Who Come Together To Do Business And Agree To Share The Profits And That Is The Essence Of The Aims And Objectives Of Any Partnership Firm. There Is A Need And Importance Of A Partnership Firm Considering The Various Advantages As The Formation Of A Partnership Firm Can Result In Increased Money And Savings, Better Business Opportunities That Can Be Grabbed To Further Expand The Business, The Work And Life Balance Is Also Maintained And There Can Be Possible Tax Benefits As Well If A General Partnership Is Formed. A Partnership Firm Has Its Set Of Disadvantages As Well; Lack Of Regulation, Complex Transfer Of Ownership, Etc. Which Can Be Eliminated By Formulating A Well-Drafted Partnership Agreement And Registering A Partnership Firm.
The General Features Or Characteristics Of A Partnership Are That It Is Constituted Through An Agreement Between Two Or More Persons Which Can Be Either Oral Or Written And It Gives Rise To A Mutual Agency Under Which All Are Liable For One’s Fault And Every Partner Shares The Risks And Rewards. The Share In The Earnings Is Not Equal Rather It Is According To The Capital Invested By The Particular Partner. The Partners In A Partnership Firm Share The Ownership And All The Partners Have The Right To Make The Decisions That Can Affect The Firm And The Assets Attached To The Firm.
Registration Of partnership Firm
The Registration Of A Partnership Firm Is Governed By The Indian Partnership Act, 1932, Registration Of A Partnership Firm Is Not Compulsory Under The Act And Consequently, The Effects Of Non-Registration Of A Partnership Firm Are Provided Under Section 69 Of The Indian Partnership Act, 1932. The Procedure For Registration Of A Partnership Firm Is Given Under Section 58 Of The Act Which Specifies The Application Procedure For The Registration Along With All The Details Required.
The Process Of Registration Of A Partnership Firm Is Undertaken By The Registrars Of Firms Appointed By The State Governments Within The Scope Of Their Powers. The Registration Of The Firm Will Commence When An Application Is Prescribed Containing All The Details And Accompanied By The Fees For Registration Of The Partnership Firm Mentioned In Schedule I; Which Is The Maximum Fee That Can Be Charged By Each State. The Partnership Firm Registration Fees Are Set By Each State Complying With The Provisions Of The Act. The Application Must State:
- The Name Of The Partnership Firm.
- The Principal Place Or The Place Of The Business.
- Name Of Any Other Location Where The Business Is Being Carried Out.
- The Date Of The Inclusion Of Each Partner In The Partnership Firm.
- The Name And Full Address Of Each Partner.
- The Duration Of The Partnership Firm.
The Application Shall Be Duly Signed By All The Partners Of The Partnership Firm Or Their Agents In Presence Of A Witness Who Shall Be An Advocate, A Gazetted Officer, Etc., To Show Consent Of All The Parties To Register The Partnership Firm. The Registrar Will Examine All The Details Of The Application Sent By The Partners To Register A Partnership Firm And If He/She Is Satisfied With All The Details Will Enter The Name In The Register Of Partnership Firms Called Register Of Firms And Will File The Statement And The Registration Procedure Of Partnership Firm Will Be Completed When The Firm Gets The Legal Recognition And A Certificate Of Registration Is Issued By The Registrar.
The Online Partnership Firm Registration Is A Facility Now Provided By Various States Under Which The Same Application Can Be Submitted Online And All The Documents Can Be Scanned And Uploaded On The Website And The Certificate Of Registration Can Also Be Sent Through The Mail. An Acknowledgment Number Shall Be Raised After The Submission Of The Application To Further Login And Track The Process On The Website Apart From This The Whole Procedure And The Required Details Remain The Same.
Consequences of non-registration of a partnership firm
The Registration Of A Partnership Firm Is Not Compulsory But It Is Always Advisable To Register A Partnership Firm As Non-Registration Has Its Own Set Of Consequences That Can Affect The Functioning Of The Business, The Effect Of Non-Registration Of A Partnership Firm Is Given Under Section 69 Of The Indian Partnership Act, 1932.
There Can Be No Suit To Enforce A Right Arising From A Contract Or Conferred By The Act In Any Court By Or On Behalf Of Any Person Suing As A Partner In A Firm Against The Firm Or Any Person Alleged To Be Or Have Been A Partner In The Firm Unless The Firm Is Registered And The Person Suing Is Or Has Been Included In The Register Of Firms. Along With This, There Can Be No Suit Arising From A Contract Against Any Third Party Unless The Firm Is Registered.
dissolution Of Partnership Firm
Rules Regarding The Dissolution Of The Firm Are Provided Under Chapter VI (Section 39 – Section 55) Of The Indian Partnership Act, 1932. The Dissolution As Per The Act Is The Dissolution Of Partnership Between All The Partners Of A Firm Which Can Be Carried Out Through An Agreement Which Is A Consensual Dissolution Or Can Be Dissolved Through Compulsory Dissolution When A Partner Is Declared Insolvent Or Happening Of An Event Which Renders The Whole Business As Illegal And Unlawful. The Firm Can Also Be Dissolved On The Occurrence Of Various Contingencies; Death Of A Partner, Completion Of The Term Of The Partnership, Etc. The Court Can Also Order The Dissolution Of A Partnership Firm On Various Grounds Such As Unsoundness Of Mind Of A Partner, Incapability Of A Partner To Perform The Promises And Duties, And Willful Breach Of Partnership Agreement Business.
Even After The Dissolution Of The Firm, The Partners Remain Liable To The Third Parties For Any Done By Any Of Them Which Would Have Been An Act Of The Firm If Done Before The Resolution. The Settlement Between The Partners Shall Be Done According To The Provisions Of The Act After Dissolution.
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