Partnership Firm Registration

Partnership is an agreement between two or more people to share the profits of a business. The business can be carried on together by all the partners or any one partner representing the others. A partnership can be for a fixed period of time or it may be limited to a specific project or it may be dissolved at will.

Three elements are necessary to form a partnership:

• There must be an agreement between two or more persons.
• The agreement must be to share the profits of the business.
• All partners together, or any one, on behalf of the others must carry on the business.

The Partnership Act does not prohibit a non-citizen from joining an Indian partnership firm, subject to necessary clearances and permissions from satisfactory authorities in this regard.

Capital is the initial amount in cash or kind contributed by the partners to start the business. It is not necessary for each partner to contribute equally to the capital. Contribution is based on the agreement between the parties.

It is not compulsory for a partnership deed to be in writing. Partnerships can also be oral.

Partners must be major (above the age of 18), should be sane and should not be disqualified by law from entering into a contract.

No, a minor cannot become a partner. However, your minor son can be admitted to the benefits of the partnership firm. He can share the profits of the partnership business with the consent of the other partners. He can also access, inspect and copy the accounts of the firm. Though the minor is not personally liable for the losses of the firm, his share in the partnership business is liable for the losses incurred.

A minor admitted to the benefits of partnership, has the option to become a partner within six months of attaining majority. He has to give a public notice stating his acceptance or rejection of partnership. In the absence of a notice, it is considered that he has become a partner of the firm.

The following are the rights of a partner:

• To take part in the business.
• To share the profit or loss of the business.
• To inspect and make copies of the books of the firm.
• To receive remuneration for taking part in the business if specified in the partnership deed.
• To receive interest on capital if specified in the partnership deed.

Your duties as a partner are to:

• carry on the business.
• be just and faithful to each partner.
• disclose true accounts of the firm.
• furnish full information of all things affecting the firm.

• Submit a dispute relating to the business to arbitration.
• Open a bank account on behalf of the firm in your own name.
• Compromise or relinquish any claim or portion of a claim of the firm.
• Withdraw a suit or proceeding filed on behalf of the firm.
• Enter into partnership with an outsider on behalf of the firm.
• Acquire or transfer immovable property belonging to the firm.
• Admit any liability in a suit or proceeding against the firm.

If a partnership deed does not provide for duration or for dissolving the partnership in any manner, it is a Partnership at will.

• Name of the partnership firm.
• Place of business of the firm.
• Names of any other places where the firm carries on business.
• Date of joining of each partner.
• Name and permanent address of the partners.
• Duration of the firm.The statement must be signed by all partners or by their agents specially authorised in this behalf.

A notice served on any one of the partners who manages the affairs of the firm is treated as a notice on the firm under the law. However, in case of fraud being committed on the firm by or with the consent of the managing partner it shall not be treated as a notice to the firm but as a notice to only that partner who has committed fraud on the firm.

Yes, a partner can transfer his interest in the business to an outsider, but only with the consent of all other partners.

The mode of introducing a new partner is based on provisions in the partnership deed. A new partnership deed is required once the new partner is admitted into the firm.

A partner can nominate a successor to take his place in the event of death or retirement of the partner. The mode of introducing a new partner or successor is based on provisions in the partnership deed. A new partnership deed is required once the new partner is admitted into the firm.

• By agreement.
• By compulsory dissolution.
• On the happenings of certain events.

A partnership firm can be dissolved at any time if all the partners decide to dissolve it. This is known as dissolution by consent.

Partnership can be dissolved according to the contract between the partners. The partnership deed should contain the provision of dissolution. The consent of all the partners is not necessary.

• When all the partners are declared insolvent.
• When all the partners but one as insolvent.
• When the business becomes illegal due to changes in laws.
• The firm is compulsorily dissolved even when the business is lawful but carrying it under the partnership becomes unlawful.

• If the firm has been constituted for a fixed period then on the expiry of that period.
• If the firm has been constituted for one or more project, then on the completion of that project.
• On the death of the partner.
• On the declaration of a partner as insolvent.

In a partnership at will, any partner can dissolve the firm at any time by giving a notice to dissolve the firm. That notice should be in writing and signed by the partner who gives it. The firm is dissolved on the date mentioned in the notice. If the date is not mentioned then the firm is dissolved from the date of communication of such notice.

• When one of the partners becomes insane.
• When one of the partner is permanently incapable of performing his duties due to illness. 3. When a partner is guilty of misconduct, which is harmful to the business.
• If a partner frequently breaks the rules of the firm.
• When a partner transfers his interest in the firm to a third party without the consent of other partners.
• When the business of the firm incurs repeated losses.
• On any other ground which the court deems fit.

• Deceased partner
• Insolvent partner
• Partner who is not known to be a partner and who has retired.