Partnership in India is governed under the Indian Partnership Act, 1932. It extends to whole India except the state of J&K and partnership registration is done by Register of Company (ROC). As per Section 4 Partnership Act, 1932 “It is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into a partnership with one another are called individually “partners” and collectively “a firm”, and the name under which their business is carried on is called the “firm name”. However, Partnership registration is not a mandatory requirement but it is advisable to register a firm.
Features of partnership
- Mode of creation: It is created by an agreement between the partners however partnership registration is not a mandatory requirement under the Partnership Act.
- Separate legal entity: A partnership firm has no separate legal existence. The partners and the firms are one and the same.
- Member’s liability: Members of the partnership firm will have joint and unlimited liability.
- Partners: The maximum number of members in partnership cannot exceed 50.
- Perpetual succession: There is no perpetual succession in a partnership unless provided for indeed.
- Share transfer: The shares are not freely transferable, consent of all other partners is required.
- Members agency: Every partner is an agent of the firm and other partners.
- Powers: The partners are free to do anything that they have agreed to with mutual consent.
- Management: The partners are entitled to take part in the management of the firm unless a partner is not a sleeping partner.
- Audit: A partnership firm is not liable to audit its accounts mandatory.
- Dissolution: Dissolution of a partnership firm can be done with the consent of all the partners anytime.
The registration of a partnership firm is not mandatory, but it is beneficial if one does so. To register you need to file an application to the Registrar of Company (ROC) office in your business area.
- Verification and signature of all the partners is required
- Attach the following documents and pay the prescribed fees
- Registration application in Form-I
- Duly filled affidavit specimen
- Certified partnership deed copy
- Property papers or rental/lease agreement of the business location.
- The partnership deed formed must have the following information in it:
- Name of the firm
- Business place location(s)
- Date of partnership formation
- Complete name and permanent address of partners.
- The time period of the partnership firm, if any.
After the application is filed the Registrar of Company (ROC) will go through it and once it is satisfied that compliance is met then it will issue Certificate of Incorporation (COI) and enter the company’s name in the register. After receiving the COI, registration of partnership is completed.