Do you have a company with partners and are looking for a legal agreement or partnership deed among yourself for a smooth journey to your company's success? Then you need a partnership deed. But you don't know what is a partnership deed ? Then you are at the right place. In this blog, I will let you know what is a partnership deed, the importance of a partnership deed, the documents required for the agreement, and how to get your partnership deed using eSahayak.
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So exactly what is a partnership deed?
To explain it, in simple words, it is a written legal agreement for the partners of the firm under The Indian Partnership Act,1932, that mentions the power of each partner of the firm, the rights they own, the terms and conditions to which each of them have to agree at all times. After signing the partnership deed the firm gets registered as a Partnership firm.
Why is a deed of partnership important for a firm?
A partnership deed is important as it mentions:
- The rights, responsibilities, and liabilities of all the partners towards the firm.
- The conduct of the business
- Mutual rights and liabilities.
- Extension and restriction of partner’s implied authority.
- Profit and loss distribution among partners.
- General duties of partners.
- Duty to indemnify for loss caused by fraud.
- Dispute resolution clause.
- Rights of transferee of a partner’s interest.
- Conditions that need to be fulfilled for the termination of a partner, the retirement age and the consequences of either.
- Liability for acts of partners done after dissolution.
- The remuneration or salary of the partners and working partners. However, interest is paid to each partner who has invested capital in the business.
What if you don’t register for a partnership deed?
- No suit in a civil court by the firm or other co-partners against any third party.
- As part of an unregistered firm, you, your partners, or the firm cannot claim a set-off (this refers to the mutual adjustment of debts owed) in a dispute with a third party.
- An aggrieved partner cannot bring legal action against other partner or the firm.
- A third party can sue the firm.
- Partners of an unregistered firm cannot file any suit to enforce a right against the firm.
What do you need for a partnership deed registration?
- The minimum age to become a partner is 18 years at the time of registration
- The name of the firm.
- Name and addresses of the partners.
- Nature of the business.
- The term or duration of the partnership.
- The amount of capital to be contributed by each partner.
- The number of withdrawals that can be made by each partner.
- The interest to be allowed on capital and charged on drawings.
- Rights of partners.
- Duties of partners.
- Remuneration to partners.
- The method to be used for calculating goodwill.
- Profit and loss sharing ratio.
Is there any alternative to a written partnership agreement?
Well, yes there is. The agreement can be of two types written or oral agreement. But the oral agreement is literally of no use if the firm has to deal with tax which mostly is, so it is advisable to have a written partnership agreement.
I hope you have now understood what is a partnership deed is, so now the question is where to apply for a partnership deed?
Here is when eSahayak comes into the picture. A one-stop solution for all Government & Legal Documents like birth certificates, renewing a driving license, NCA(Non-Compete agreement ), etc.
This is how a partnership deed looks like.
You can simply fill the form and attach the documents required and that’s it, your job is done! Click on generate now button below and then generate a partnership deed for your firm.