Partnership Deed
A partnership deed is a legal document that outlines the terms and conditions governing the relationship between partners in a partnership firm. It serves as a crucial document for reference in case of disputes or disagreements and helps in maintaining clarity regarding the rights, responsibilities, and profit-sharing arrangements among partners. While partnership deeds may vary based on the specific needs of the partners and the nature of the business, they generally include the following key elements:
1. Name and Address of the Partnership:
Clearly specify the name and address of the partnership firm. The partnership deed is registered under the Indian Registration Act, 1908. It must be printed on non-judicial stamp paper with a value of Rs.200 or more based on the capital of the partnership firm. It has to be signed by all the partners and each partner should have a copy of the partnership deed.
2. Name and Details of Partners:
Include the full names, addresses, and other relevant details of all the partners involved in the partnership.
3. Nature of Business:
Clearly outline the nature of the business that the partnership will engage in. This helps in defining the scope and purpose of the partnership.
4. Capital Contribution:
Specify the amount of capital contributed by each partner to the partnership. This may include both initial contributions and any future contributions.
5. Profit Sharing:
Clearly define how profits and losses will be shared among the partners. This section typically includes the percentage or ratio according to which profits will be distributed.
6. Management and Decision-Making:
Outline the decision-making process and the management structure of the partnership. Specify the roles and responsibilities of each partner in the day-to-day operations.
7. Drawings and Salaries:
Detail the procedures for partners to withdraw money from the business for personal use (drawings) and whether partners will receive salaries.
8. Interest on Capital and Loans:
If applicable, specify the rate of interest that partners will receive on their capital contributions and any interest on loans provided to the partnership.
9. Duration of Partnership:
Indicate whether the partnership has a fixed term or is indefinite. If there is a fixed term, mention the procedures for extension or termination.
10. Admission or Withdrawal of Partners:
Specify the conditions and procedures for admitting new partners to the partnership or for a partner to withdraw from the partnership.
11. Dispute Resolution:
Include provisions for resolving disputes among partners, whether through arbitration, mediation, or other agreed-upon methods.
12. Dissolution:
Outline the circumstances under which the partnership may be dissolved and the procedures for winding up the business.