Partnership Registration

Under the Indian Partnership Act, 1932, a minor cannot become a partner but can be admitted to the benefits of the partnership firm. With the consent of other partners, he can share profits of the firm and also have access to the books of accounts of the firm.

In order to form a partnership firm, a written partnership deed is not compulsory. Even, a verbal/oral agreement to carry on the business under partnership is suffice. But it is better to have a formally documented partnership deed to avoid future disputes

Further, registration of firm is also not compulsory. However, registration of partnership firm with Registrar of Firms (ROF) is advisable

The effects of non-registration of a partnership firm are as follows:

• A partner of unregistered firm cannot sue the firm or his partners in case of any mutual disputes. Similarly, the firm can also not sue the partners
• An unregistered partnership firm cannot file a suit against third party for breach of a contract. However, the third party can sue the firm to enforce their dues or claims
• As part of an unregistered firm, you, your partners or the firm cannot claim a set-off (mutual adjustment of debts owed) in a dispute with a third party

Eligibility to enter into partnership is as below:-

• Individual: Any individual who is competent to enter into a contract (Person of sound mind& major & solvent) can become a partner of a partnership firm
• Partnership Firm: A partnership firm cannot be the partner of any firm but its partner can enter into a partnership with any other person
• Hindu Undivided Family: A karta of the HUF can become a member of a partnership firm in his individual capacity
• Company: A private or public limited company can be a partner in a partnership firm if it is allow to do so by the Articles of Association

Partnership can be formed orally but it is advisable to get the terms & conditions of the partnership well documented to avoid future disputes. Following are the major points covered in a partnership:-

• Full details of partners namely name, address and age
• Name of the firm and proposed office address
• Nature of the business to be conducted
• Date of commencement of partnership
• Duration of partnership
• Capital to be contributed
• Ratio of sharing profit & loss
• Management of the firm
• Manner of distribution of remuneration
• Rate of Interest on capital & loans contributed by partners
• Interest on drawings by partners
• Retirement & Admission of partners
• Dissolution clause
• Duties and obligations of partners
• Arbitration clause

A partnership firm can be initiated with any amount of capital contribution. There is no minimum capital condition for a partnership firm. The partners have to contribute their share in capital as agreed in any form whether tangible/ intangible asset

Yes, it is necessary to notarize the partnership deed if it is documented in a written form

Every partner is jointly liable with all the other partners and also severally liable for all the acts of the firm, during the course of business while he/she is a partner

The application for registering a partnership firm is submitted with Registrar of Firms (ROF) under whose jurisdiction the place of business of the firm falls. The application is made in prescribed firm (Form-1) along with other requisite documents and fees

If the partnership is for duration, the partnership gets automatically dissolved as the duration elapses. But if partnership is at will, the partners of firm can dissolve the partnership by mutual consent of all partners in accordance with the terms laid out in the deed