Overview of Partnership Deed

A partnership deed registration is a legal agreement when people come together to run a company or enterprise. It mentions all essential terms & conditions related to the enterprise, such as loss/profit sharing, admission of new partner/s, obligations, decided rules, exit process, salaries, etc. A partnership deed document plays a vital role. If the firm ends in the courtroom, it serves as a legal document. So, there is no risk of destruction of the partnership deed in India for the possession of partners.

Also, partnership agreement for investment provides several benefits, such as, it makes the organization eligible for the PAN to open a bank account. It helps to obtain an FSSAI license and GST registration in the organization’s name.

Essential characteristics of the partnership deed format are as follows:

• Name of the firm.
• Name and addresses of partners.
• Nature of business.
• The term and duration of the partnership.
• The capital amount is to be contributed by partners.
• Drawings made by each partner.
• The interest is allowed on the capital and charged on drawings.
• Duties of partners.
• Rights of partners.
• Remuneration to partners.
• The method used to calculate goodwill.
• Profit/loss sharing ratio

Contents of Partnership Deed Registration

A partnership Deed protects the interest if there’s any confusion or dispute over a particular matter. Thus, the Deed includes all legal details related to the firm. Although there is no standard format to draft a Partnership Deed, in order to provide you with a fair understanding of the contents, we provide you with a list that presents in the agreement of partnership:

A partnership deed in India includes information, as follows:

Partnership Purpose – The name and address of partners and necessary details to explain the business type undertaken by partners.

Principal place of partnership business – The firm operates from the location(s) as Partners determine from time to time.

Duration of Partnership – The deed must mention the establishment date of the firm and the period of the deal.

Capital contribution – Contribution of a firm’s capital, property, goods, cash, or services is agreed-upon value.

Capital Withdrawals – Details of drawing policy permitted to partners and whether any interest is paid to the firm on drawing.

Salary and Commission – Details of ratio or percentage of the salary of the partners.

Profit/Loss ratio – The partnership agreement for investment mentions profit/Loss ratio that should be accrued to and borne by the partners.

Regulation to Dissolve partnership – Details of firm’s accounts and how it is treated if firms are dissolved.

Rules for admission of a new partner – Details regarding future admission, the exit of a partner, and retirement.

Rules to Follow – If a partner goes bankrupt, guidelines are to be followed.

Audit and Account Details – Accurate and complete account books of the firm’s transactions are available at reasonable times that can be open to examination by any partner.

Withdrawal of a Partner – Rules for the voluntary withdrawal to be mentioned in the partnership deed format.

Duties of Partners – Partnership deed registration mentions the responsibilities and roles of each partner.

Partnership and Banking Funds – The funds held in the name of a firm will be placed in the bank account designated by its Partners.

Borrows – A written consent will be required to take loans from banks, for the financial institutions for the financial requirements of the firm.

Legal Considerations for The Partnership Deed in India

Partnership Deeds in India are governed by the Partnership Act 1932. It is created between the partners and is required to have the stamp properly, according to the Indian Stamp Act. Each partner must have a photocopy of the partnership agreement for investment. A partnership deed copy must be filled with a firm registrar if it is registered. It is not necessary to register a partnership firm, it is suggested to register the same because of the numerous advantages that registration offers.

How Can a Lawyer Draft a Partnership Deed?

One of the most important steps that you sho[uld undertake is to hire a good lawyer as he/she is aware of all the nitty-gritty of the right legal procedures and requirements in a proper partnership deed registration. A lawyer drafts a Partnership Deed since a lawyer should have the necessary legal knowledge and experience in order to draft and handle such documents. He/She will be able to understand and draft for you according to the particular situation – as the circumstances, facts, and needs to be involved. A documentation lawyer should be aware of drafting techniques and clauses included in your agreement. Hiring a lawyer in order to draft important legal documents will help you in many ways.

Highlighted Benefits of Partnership Deed

A proper Partnership Deed establishes legal obligations among partners of the firm. Although, it’s not needed to be registered. It means that you will be able to operate a registered Partnership firm.

Some examples can help you to know the importance of a Partnership Deed:

• It specifies responsible persons for what it means that the roles of partners are outlined.
• All terms and conditions of the Partnership have been written out in advance which helps to avoid misunderstanding between partners.
• Any type of disagreement between partners can be resolved by referring to the Partnership agreement.
• It establishes the rights, responsibilities, and obligations of each partner.
• A partnership deed in India may include sections defining what partners have to be paid in terms of salary. Working partners are compensated. However, interest should be paid to partners contributing to the capital of the company.