Free Partnership deed maker
Before we discuss about contents of partnership deed and how to make partnership deed, we would like to tell you that we have made a small tool that drafts a partnership deed for you without any hassle, you just need to enter few details asked by the form then you will get your partnership deed delivered on your mail which will be editable as well. and you will get all this for free.
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Before getting into the contents of partnership deed, let us first understand what is partnership deed and why is it important.
What is partnership deed?
Whenever a partnership firm is made, the document that gives the operating and administrative framework of the firm is called partnership deed. It outlines the nature of business of the firm, functions duties and rights of partners.
Importance of partnership deed
Though, in india it is not mandatory to have a partnership deed however if a firm makes a deed, it gets some extra benifits for example it avoides the misunderstanding between the partners and reduces the chances of litigation. If a firm doesn’t have a partnership deed than it will be governed by the provisions of indian partnership act 1932 which we will discuss later in this article.
Download partnership deed format in Doc and pdf.
How to make partnership deed?
Being a legal document Partnership deed requires every aspect written in legal language to avoid any ambiguity. Here are the contents of partnership deed that needs to be considered while drafting the deed.
Partner’s clause :
In this section, following details are disclosed with respect to each Partner.
Name of Partner
Relative of partner
Relationship between the partner and their relatives
Address of partners.
In case there is a partner company then following details are disclosed w.r.t the partner company.
Name of company
Address of Registered office of company
Objectives for which the company was formed.
Here following details are disclosed.
Name and address of partnership firm.
Bussiness of the firm
If the bussiness place is on rent, then details of landlord as well as a declaration that landlord doesn’t have any objection with the activities of the firm.
Here total capital witj which the firm is started, is disclosed. Along with this, capital contribution made by each Partner.
profit sharing ratio:
n this part of the partnership deed, profit sharing ratio of each Partner is disclosed.
It shows the which partner or partners will manage the affairs of the firm and if they require consent of other partners or not.
Bank Account clause
In this paragraph, details of bank account are disclosed like
Name with which the bank account is being opened.
Which partner will manage the account.
It shows the following details
Where the books will be kept
Who will have the access to books.
Following details are disclosed in this clause.
Date of signing
Place of signing
Sign of each Partner
Name, address and signature of witness.
In case of partner company, name, address and sign of authorized signatory, along with the seal of the company.
Procedures to be followd when a partner retires, dies or a new partner comes in.
To what extent the provisions of partnership act will be applicable.
Whether interest shall be paid on capital or not, if yes then at what rate.
Whether the partners will have a right to draw remuneration from the firm. If yes then how much.
If any partner gives any loan to the firm then whether or not the interest will be paid on that loan.
In the absence of partnership deed:
In case a partnership firm doesn’t have a deed, then following provisions of the partnership act 1932 shall be applicable to the firm.
1. Profit Sharing Ratio:- partners will share the Profits and Losses of the firm equally irrespective of their capital contribution.
2. Interest on Capital:- No interest shall be paid to the partnes on their capital.
3. Interest on Drawings:- No Interest will be charged on drawings made by partners from their capital.
4. Remuneration to Partner:- No partner will be entitled to any salary, fees and commission for managing day to day business affairs of the firm.
5. Interest on Loan of Partner:- On any loan provided by a partner to the firm, Interest @6% p.a. would be paid on that loan even if there are losses to the firm.
6. Admission of a partner:- To admit a new partner, consent of all existing partners will be mandatory.