Startup & Laws

REGISTRATION PROCESS FOR THE PARTNERSHIP AGREEMENT

“If one of the partners in a partnership is losing his shirt while the other is counting his money, it is no longer a Partnership.”

Business can be said to be an activity, primarily carried out with the object of earning profit. Bringing various resources together to set up a business and putting them to work systematically is termed a “Business Organization”. The person who takes the initiative to set up a business provides the necessary funds and bears the risks involved is called the Owner of the business.

When a single person takes care of all the risks and all above mentioned; that business can be called a “Sole Trader Organization". When the business is carried and owned by a group of persons it may take the form of a “Partnership Firm", “A Company", or “A Cooperative Society”. But classes on types of business are not our meal of discussion.

The Registration Process For The Partnership Agreement is the topic that we are going to slice through, its importance, benefits, and some of the noted judgments by courts which can be read and understood in a better way. As defined by J.L Hanson, “a partnership is a form of business organization where or in which two or more persons up to a maximum of twenty join together to undertake some form of business activity". The Indian Partnership Act, 1932 defines it as “the relation between persons who have got agreed to share the profits of a business carried on by all of them acting for all". The Uniform Partnership Act of USA defines a partnership as an association of two or more persons to carry as co-owners a business for profit.

The agreements or partnership deeds are the main or those are said to be the vital part of any partnership business, which can be either written or oral. To avoid misunderstandings and unnecessary litigations, it is always desirable to have a written agreement. When the written agreement is duly stamped, it is known as a “PARTNERSHIP DEED”.

After registration, each partner is given a copy of the partnership deed. A partnership deed generally contains the following particulars:

• Name of the firm.
• Nature of business to be carried out.
• Name of the partners.
• The town and the place where business will be carried.
• The amount of capital to be contributed by each partner.
• The profit and loss sharing ration of each partner.
• Loans and advances by partners and the interest payable on them.
• The amounts of drawings by each partner and the rate of interest allowed thereon.
• Duties, powers, and obligations of the partners.
• Remuneration, if any, payable to the active partner.
• Maintenance of accounts and arrangements for the audit.
• Settlement in the case of dissolution of the partnership.
• The methods of evaluation of goodwill on admission or death or retirement of a partner.
• The method of revaluation of assets and liabilities on admission or death or retirement of a partner.
• The method of retirement of a partner, and the dues of a retired or deceased person.
• Arbitration (procedure in which a dispute is submitted), in case of disputes among the partners.
• Arrangements in case a partner becomes insolvent.

The Registration of Partnership firms is governed by the Indian Partnership Act, 1932 India. It regulates the partnership firms in India. The registration of a partnership is optional and not compulsory under the Indian Partnership Act. The firm's registration can be done at the time of its formation or incorporation or during the continuance of the partnership business. However, it is always advisable to register the partnership firm as a registered firm that enjoys certain privileges or special rights and benefits as compared to the unregistered firms.

The main benefits that can be enjoyed by the registered personnel under IPA,1932 are as follows :

? A partner can sue against any partner or the partnership firm, enforcing his rights arising from a contract against the partner or the firm.

? The registered firm can suit against any third party for enforcing a right from the contract, but in the case of an unregistered firm, it cannot file a suit against any third party to enforce a right. However, any third party can file a suit against the unregistered firm.

Now our main theme is curtained up here, where the Procedures for Registering a Partnership Firm are enlisted. The main procedure/methodologies or steps needed in registering for a firm under the Indian Partnership Act of 1932 are as follows:

PROCEDURES FOR REGISTERING A PARTNERSHIP FIRM

1. Application for Registration.

2. Selection of Name of the Partnership Firm.

3. Certificate of Registration.

4. Documents Requirement

? Application of partnership registration (Form 1).

? Certified original copy of the partnership.

? Partnership deed (original copy)

? Specimen of an affidavit certifying all the details mentioned in the partnership deed and document are correct

? PAN Card and address proof of the partners.

? Proof of principal place of the business firm (ownership document /rental/lease agreement).

These are the important steps or procedures to be followed under the Registration of Partnership Firm under the Indian Partnership Act, 1932, wherein all the details of the above-mentioned documents must be attached. If the Registrar is satisfied with the documents, he will register the firm in the Register of Firms and issue a Certificate of Registration.

The Partnership Registration not only entrusts the undersigned with just a piece of paper, which we say is an agreement/partnership deed copy but also many benefits and security are being provided under the eagle view of IPA, 1932 ( Indian Partnership Act, 1932).

Judgments’ by Court: The below is the judgment based on the Partnership of firms registration, the judgment was given by the High Court of New Delhi and the judgment says so: “No suit to enforce a right arising from a contract shall be instituted in any court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register Of Firms as partners in the firm".

Another judgment was made by the Calcutta High court on the Partnership Suit filed by the petitioner. The court judgment goes here: “The lessee shall not sublet, under-let or assign or part with the possession of the leasehold property or any portion thereof to anybody for whatsoever purpose and that any breach of this condition will lead to the forfeiture of the lease”.

The above-written judgment clearly defines the importance of registering a Partnership Business. The laws are said to guide, preserve, and protect the purity and objectives of the business and its partners. Therefore, follow and trust the goals of the business and our prestigious law. I am sure you will be protected under the shield of law.