PROVISIONS OF PARTNERSHIP DEED & PROCESS OF REGISTRATION – Adv.Suyog Chandulal Shah
THE
FOLLOWING ARE THE ESSENTIAL CHARACTERISTICS OF A PARTNERSHIP DEED:-
Name
and Address of the firm as well as all the partners, Nature of business to be
carried on, Date of Commencement of business, Duration of Partnership (whether
for a fixed period/project) Capital contribution by each partner, Profit
sharing ratio among the partners. The above are the minimum essentials which
are required in all partnership deeds. The partners may also mention any
additional clauses. Some of the examples of additional clauses which may be
mentioned in the partnership deed are mentioned below:-
Interest
on Partner’s Capital, Partners’ Loan, and Interest, if any, to be charged on
drawings. Salaries, Commissions etc, if any, payable to partners Method of
preparing accounts and arrangement for audit Division of task and
responsibility i.e. the duties, powers and obligations of all the partners.
Rules to be followed in case of retirement, death and admission of a partner.
These are some examples of additional points which the partners may mention in
the partnership deed. They may also mention any other point than those mentioned
above.
The
Partnership Deed created by the partners should be on a stamp paper in
accordance with the Indian Stamp Act and each partner should have a copy of the
partnership deed. Partnership Deed should also be filed with the Registrar of
Firms in case the firm is being registered. Partnerships in India are governed
by the Indian Partnership Act, 1932. As per the Partnership Act, Registration
of Partnership Firms is optional and is entirely at the discretion of the
partners. The Partners may or may not register their Partnership Agreement.
However, in case the partnership deed is not registered, they may not be able
to enjoy the benefits which a registered partnership firm enjoys.
PROCEDURE
TO CREATE PARTNERSHIP DEED & REGISTER A PARTNERSHIP FIRM:-
Partnership
and Proprietorship are the 2 most popular forms of business organisations in
India. The reason why these 2 forms of organisations are so popular is because
they are relatively easy to set-up and the no. of statutory compliance required
to be done by these forms of organisations is relatively less than the
statutory compliance applicable to LLP’s and Companies. Recommended Read:
Partnership vs Company: – Which one is suitable for your business? In one of
our previous articles, we explained on how easy it is to start a Proprietorship
Firm.
WHAT
IS A PARTNERSHIP FIRM AND ITS 5 ESSENTIAL ELEMENTS CHOOSING A PARTNERSHIP FIRM:-
Name
-The partners are free to choose any name as they desire for their partnership
firm subject to the following rules:-
1.
The names must not be too identical or similar to the name of another existing
firm doing similar business so as to lead to confusion. The reason for this
rule being that the reputation or goodwill of a firm may be injured, if a new
firm could adopt an allied name.
PROCEDURE
TO CREATE PARTNERSHIP DEED & REGISTER A PARTNERSHIP FIRM:-
The
name must not contain words like Crown, Emperor, Empress, Empire or words
expressing or implying the sanction, approval or patronage of Govt except when
the State Govt signifies its consent in writing to the use of such words as
part of the firm name [Section 58(3)] How to create a Partnership Deed? The
document in which the respective rights and obligations of the members of a
partnership is written is called the Partnership Deed. A partnership deed
agreement may be written or oral. However, practically oral agreement does not
have any value for tax purposes and therefore the partnership agreement should
be written.
REGISTRATION PROCEDURE FOR PARTNERSHIP FIRMS IN INDIA UNDER
INDIAN PARTNERSHIP ACT.
A Partnership is one of the most important
forms of a business organization, where two or more people come together to
form a business and divide the profits thereof in an agreed ratio. A
Partnership is easy to form, and the compliance is minimal as compared to
companies.
The name shouldn’t be too similar or identical to an
existing firm doing the same business,The name shouldn’t contain words like
emperor, crown, empress, empire or any other words which show sanction or
approval of the government.
How should be the agreement between partners formed?
Partnership deed is an agreement between the partners in
which rights, duties, profits shares and other obligations of each partner is mentioned.
Partnership deed can be written or oral, although it is always advisable to
write a partnership deed to avoid any conflicts in the future.
FOLLOWING DETAILS ARE REQUIRED IN A PARTNERSHIP DEED:
A. General Details:
1. Name and address of the firm and all the partners
2. Nature of business
3. Date of starting of business Capital to be
contributed by each partner
4. Capital to be contributed by each partner
5. Profit/loss sharing ratio among the partners
B. Specific Details:
Apart from these, certain specific clauses may also be
mentioned to avoid any conflict at a later stage:
1. Interest on capital invested, drawings by partners or any
loans provided by partners to firm
2. Salaries, commissions or any other amount to be payable
to partners
3. Rights of each partner, including additional rights to be
enjoyed by the active partners
4. Duties and obligations of all partners
5. Adjustments or processes to be followed on account of
retirement or death of a partner or dissolution of firm.
6. Other clauses as partners may decide by mutual discussion.
DOCUMENTS REQUIRED FOR
PARTNERSHIP REGISTRATION IN INDIA:
A partnership is easy to form
since no complex business formalities are required to be fulfilled. Partnership
registration is not compulsory and in at the discretion of the partners whether
they want to register the partnership firm or not. But a partnership firm
cannot avail legal benefits if it is not registered, hence it is always
advisable to register it. Documents required for partnership formation (whether
registered or not) are:-
Documents of Partners
PAN card of partners – All partners are required to submit
their PAN number as identity proof.
Address proof of partners – Partners can submit Aadhar Card, Driving
License, passport or Voter ID card as address proof. Name and other details on
address proof should match PAN card details.
Documents of Firm
PAN card of firm – Partners need to apply for PAN of the firm. Form 49A has
to be filed to apply for a PAN. It should be filled online by visiting https://www.onlineservices.nsdl.com/paam/endUserRegisterContact.html
It can be filed online if the authorised partner signs the
application using a digital signature certificate. Else, the application and
requisite documents have to be sent to PAN processing centre, Pune.
Address Proof of firm – If the registered
office place is rented, rent agreement and one utility bill (electricity bill,
water bill, property tax bill, gas receipt etc.) have to be submitted. Also,
NOC from landlord will be submitted.
If the registered office
place is own, utility bill has to be submitted mentioning the name of the
owner. Also, a NOC from the owner (owner as mentioned in utility bill) has to
be submitted.
Additional Documents in case of Registration
In case partners wish to
register the partnership firm, they need to submit partnership deed, ID and
address proofs of the firm as well as the partners to the Registrar of
Partnerships. With it, an affidavit is also required to be submitted certifying
that all the details mentioned in deed and documents are correct.
GST Registration
For obtaining a GST
registration, a firm needs to submit PAN number, address proof and identity
& address proofs of partner. Authorised signatory will sign the application
either using a digital signature certificate or E-Aadhar verification.
Current Bank Account
For opening a current bank
account, a firm needs to submit following documents:
1. Partnership deed
2. Partnership firm PAN card
3. Address Proof of the
partnership firm
4. Identity proofs of all the
partners
5. Partnership registration
certificate (if partnership has been registered)
6. Any registration document
issued by central or state government (normally GST certificate is submitted)
7. Copy of electricity
bill, telephone bill or water bill (not more than 3 months old)
8. Authorisation letter on
the letterhead of the firm authorising a partner as authorised signatory for
the bank account.
IS IT NECESSARY TO REGISTER A PARTNERSHIP FIRM?
Indian Partnership Act, 1932 governs the partnerships.
Registration of partnership firm is optional and at the discretion of the
partners.
Registration of partnership firm may be done at any time –
before starting a business or anytime during the continuation of partnership.
It is always advisable to register the firm since registered
firms enjoy special rights which aren’t available to the unregistered firms.
How to register the partnership firm?
An application form along with fees is to be submitted to
Registrar of Firms of the State in which firm is situated. The application has
to be signed by all partners or their agents.
THE
BENEFITS OF REGISTERING A PARTNERSHIP FIRM ARE MENTIONED IN SEC 69 OF THE
INDIAN PARTNERSHIP ACT AND THEY HAVE BEEN EXPLAINED BELOW:-
Partnerships
in India are governed by the Indian Partnership Act, 1932 and as per this act a
partnership deed may be registered or unregistered. However, there are certain
benefits of registering a partnership firm. The successful working of a
partnership depends upon the mutual confidence and utmost good faith among the
partners because each partner is an agent of others and binds them to the
fullest extent of their fortunes. It is, therefore advisable that the partners
should be selected with extreme care and caution. And there goes the saying:-
“Do not be in too great a hurry while selecting a partner. Choosing a partner
is like choosing a wife, marry in haste and repent at leisure” If the working
of the partnership firm goes smooth and there is a good understanding between
the partners within themselves and with the outsiders, registration may not be
required. However, as future is highly uncertain, it is always advisable to
register a partnership firm and the following are the benefits of registering a
partnership firm.
1.
POWER TO FILE CASE IN A COURT BY A PARTNER AGAINST THE FIRM OR OTHER
CO-PARTNERS
If
any dispute arises among the partners or between a partner and the firm or
between a partner and ex-partners, and the dispute is based upon the rights
arising from contract (i.e. partnership deed) or upon the rights conferred by
the Partnership Act, then a partner of a registered firm can always file a case
in the court. This power is not available to the partner of an unregistered
firm. However, a criminal proceeding can be brought by a partner of an
unregistered firm against the other partner(s). Thus, if a partner steals the
property of the firm or puts fire to the buildings of the firm, any partner can
prosecute him for the same.
2.
POWER TO FILE CASE IN COURT BY FIRM AGAINST 3RD PARTIES
The
partners of a registered firm can always file a case in the court (if
required), to enforce any right arising from contract e.g. for the recovery of
the price of goods supplied. This power is not available to the partners of an
unregistered firm (except in case of criminal proceeding). It should however be
noted that although an unregistered firm cannot file case against 3rd
party, the 3rd party always has the power to file a case against
both registered as well as unregistered firm.
3.
POWER TO CLAIM SET-OFF
If
a 3rd party sues the firm to recover a sum of money the registered firm can
always claim a set-off i.e. the registered firm can say that the 3rd
party also owes some money to the firm and the same should be adjusted against
the claim in question. This power is not available to an unregistered firm. The
above are some of the major benefits of registering a partnership firm and all
partnership firms are advised to register themselves with the registrar of
firms. It should however be noted that registration for Income Tax purposes is
different from registration with the Registrar of Firms. Registration with
Income Tax Department is mandatory for all Partnership Firms.
PROCEDURE FOR EFILING OF
PARTNERSHIP DEED
https://efilingportal.in/PartnershipFirm
1.
|
Upload Your Document
|
2.
|
Make Advance Payment (Half)
|
3.
|
We will draft your partnership
deed and apply it for PAN & TAN (1 Day Process)
|
4.
|
You will recieve PAN Copy
physically at your address (15 Days' Process)
|
5.
|
We will apply for Goods &
Service Tax (GST) registration in the Name of Firm after you send us the
scanned copy of PAN you recieved (4-5 Days' Process)
|
6.
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Make Balance Payment (Half)
|
7.
|
We will send you the Goods &
Service Tax (GST) Registration Certificate.
|
FORM No. 1
(SEE RULE 3)
THE INDIAN PARTNERSHIP ACT, 1932
APPLICATION FOR REGISTRATION OF
FIRM
BY
THE NAME
Presented
or forwarded to the
Registrar
of Firms for filling by
We, the undersigned, being the partners of the firm hereby apply for
registration of the said firm and that for purpose supply the following
particulars, in pursuance of section 58 of the Indian Partnership Act, 1932.
i) The Firm name
a) Principal place
ii) Places of business
b) Other places:
iii) a) Name of Partners
in full
|
b)
Date of joining the firm
|
c)Permanent address in full
|
1.
2.
3.
4.
5.
6.
|
iv) Duration of
the firm :
1.
2.
3.
v)
Station :
vi)
Date :
Signature of the partner or of the
specifically authorised agents
I
,--------------------------------------------------------------Son
of-------------------------
Years of
age, of ----------------------------------------------------religion, do hereby
declare that the above statement is true and correct to the best of my
knowledge and belief.
Date Signature
1.
Witness:
I
,--------------------------------------------------------------Son of-----------------------------------
Years of
age, of ----------------------------------------------------religion, do hereby
declare that the above statement is true and correct to the best of my
knowledge and belief.
Date
2. Signature
Witness:
I
,--------------------------------------------------------------Son
of-------------------------
Years of
age, of ----------------------------------------------------religion, do hereby
declare that the above statement is true and correct to the best of my
knowledge and belief.
Date
3. Signature
Witness:
I
,--------------------------------------------------------------Son
of-------------------------
Years of
age, of ----------------------------------------------------religion, do hereby
declare that the above statement is true and correct to the best of my
knowledge and belief.
Date
4. Signature
Witness:
I
,--------------------------------------------------------------Son
of-------------------------
Years of
age, of ----------------------------------------------------religion, do hereby
declare that the above statement is true and correct to the best of my
knowledge and belief.
Date
5 Signature
Witness:
I
,--------------------------------------------------------------Son
of-------------------------
Years of
age, of ----------------------------------------------------religion, do hereby
declare that the above statement is true and correct to the best of my
knowledge and belief.
Date Signature
6
Witness:
Signature with name,
designation and full Permanent and full permanent address in block letters.
Adv.Suyog Chandulal Shah
Adv.Suyog Shah & Associates,
Email :- advsuyogshah@gmail.com,
Mobile No.9850827178
Office No.0253-2313178
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