The partnership deed is an essential legal document of the partnership firm and it holds all the matters related to the formation, systematic functioning and management, and resolution of the disputes among the partners of the partnership firm. The full legal strength is acquired by the partnership deed when registered precisely with the concerned legal authorities.
Here, it is required to mention that, the partnership is when two or more partners have ownership over the business and bear all the liabilities of the company, and they distribute all the profits and losses according to the agreed proportions. The partnership firms are registered as per law and procedure mentioned under the Indian Partnership Act of 1932, in India. In the below section, we have described the importance of partnership deed and the detailed procedure of the registration, which will help the Indian and foreign people who are willing to establish a partnership firm in India.
Importance of the Partnership Deed
- The following points explain the importance of the partnership deed to the people and the partners:
- All the information about the sharing of profits and capital contributions.
- Aim of the partnership firms and the basis of the formation.
- Information related to the location of the partnership firm and its business activities, and the details of all legal partners.
- The duties, responsibilities, and rights of the partners.
- In case of disputes between the partners, all the provision that is to be followed for a peaceful settlement.
- All the guidelines required for the smooth functioning and progressive performance of the firm.
- Retirement or termination clauses of partners and it must be as per the provision of an act.
Registration of Partnership Deed
It is not compulsory to register a deed, but it is beneficial and securing to register it. The following steps are required to register a partnership deed:
- The first step is, drafting of the deed covering all the material matters and the elements that are mentioned above in this article.
- Next, purchasing the Non-Judicial Stamp Paper or e-Stamp paper form the state in which the partnership firm is situated. It is mandatory that the partnership deed should be printed and notarized on a non-judicial stamp paper with a value of at least INR 100/- if capital is INR 1000. However, Deed value depends on the capital clause.
- The next step is, signing of the agreement by all the partners. It is required that all the partners should keep a duly signed copy of his/her records.
- The last step is the legitimization of the deed. The Registration of the partnership deed can be executed either under the Indian Registration Act of 1908 or the Indian Movable Property Act.