What is a Partnership Deed
- A Partnership deed is a legal written document entered into by the partners of the business.
- The deed is registered under The Indian Registration Act, 1908.
- It is a legal document that outlines the rights, responsibilities, and liabilities of the partners.
- The document serves as a baseline in case of any dispute regarding the parties’ role or benefits in the business.
- The following are the essentials that should be present in a partnership deed:
- Name of the partners
- Name of the business/ firm/ organization
- Address of the partners and business
- Date of commencement of business
- The profit-sharing ratio of partners
- Kind of partnership i.e., whether it is a general partnership or an LLP
- Duration of partnership
- Contribution in respect of funds by each partner
- Apart from the abovesaid, the partners may provide additional clauses in the deed concerning:
- salaries and commissions payable to the partners in certain cases
- methods of preparation of accounts
- provisions relating to division or delegation of responsibility
- provisions relating to admission, death, or retirement of any partner
- arbitration clauses, if any
- when business/ company shall dissolve
What is a Partnership
- A partnership is an arrangement wherein the persons, known as partners, agree to advance their mutual interest.
- A partnership may be of any body of persons/ organizations/ schools/ businesses, etc.
- One of the main advantages of a partnership is that you have more borrowing power thus making expansion easier.
- The partnership may either be a “general partnership” or a “limited liability partnership (LLP)”
- In a general partnership, the partners conduct the affairs of the business and are wholly liable for the debts of the business.
- However, LLP consists of general as well as limited partners wherein the partners who have limited liability are not responsible for the affairs of the business and are merely investors.
Execution of Partnership Deed
- A partnership deed is executed on a non-judicial stamp paper of Rs. 100 or more.
- It is to be in accordance to the Indian Stamp Act, 1899.
- Further, the deed will be signed in the presence of all the partners.
- Thereafter, every partner will thenceforth retain a signed original for his/ her own records.
- Once the document is signed, the deed is held by the partners in duplicate or triplicate.
The format of Partnership Deed
Deed of Partnership
THIS INDENTURE made this __________ day of ________ in the year _____________
- SHRI/ SMT ………………….. (M/…….) son/ daughter/ wife of……………. residing at …………………………….., hereinafter referred to as the “Party of the First Part”
- SHRI/ SMT ………………….. (M/…….) son/ daughter/ wife of……………. residing at …………………………….., hereinafter referred to as the “Party of the Second Part”
- SHRI/ SMT ………………….. (M/…….) son/ daughter/ wife of……………. residing at …………………………….., hereinafter referred to as the “Party of the Third Part”
- (The expression the party of the First Part, the party of the Second Part and the party of the Third Part unless they are repugnant to the context or meaning thereof, mean and include their respective heirs, executors, administrators, and assigns)
THAT ALL the parties hereto being the parties of the First Part, Second Part and Third Part have agreed to commence business in partnership with each other on the terms and conditions mentioned herein.
NOW, THIS INDENTURE WITNESSETH and it is hereby covenanted and finalized by and between the parties as follows:
- The Partnership business shall be carried on under the name and style of ________ presently from ___(address of head office) as will be decided mutually by the parties hereto.
- The Partnership shall be deemed to have commenced on the date of ___________
- The partners have mutually agreed to carry on the business of _____________(description of business activity).
- The duration of the Partnership shall be at will.
- That the initial capital of the business shall be __________ as contributed by partners in the ratio of _____
- The profit or loss of the firm after adjustment of salary, bonuses, etc. shall be shared equally among all the partners.
- That all the parties shall be managing partners and shall take an active part in the day-to-day conduct of the business of the firm.
- If any partner wants to retire from the Partnership he shall be entitled to do so by giving _____ months’ notice in writing to the other Partners of his intention to retire and on the expiration of _____ months from the date of such notice, he shall cease to be a partner.
- That the death, lunacy, or insolvency of any partner shall not dissolve the Partnership automatically.
- That each partner shall be entitled to draw against his share of profits an amount that has been agreed by all the partners mutually.
- That the firm shall open a bank account in the name of ______ which shall be operated jointly by all the members.
- The practice of borrowing would require the consent of all the partners.
- Any dispute arising out of the affairs of the business of the firm shall be referred to as a Sole Arbitrator.
- That no partner shall, without the consent of all the other partners, become a partner of any other business organization or company.
IN WITNESSETH WHEREOF the parties have subscribed to their respective signatures and seals delivered on this day ____ month ___ year ____ at _____.
SIGNED, SEALED and DELIVERED by the within named:
- Party of the First Part SHRI/ SMT ……….Signature
- Party of the Second Part SHRI/ SMT ……….Signature
- Party of the Third Part SHRI/ SMT ……….Signature
In the presence of:
- Shri/ Smt. _____ address ______ ……….Signature
- Shri/ Smt. _____ address ______ ……….Signature
Related Post: NSDL PAN