What is Partnership Deed? Explain the content of Partnership Deed |
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| Ans : Partnership deed is an important document of partnership business. It is an evidential document in which all the agreed terms and conditions among partners about partnership business is written. This deed must be duly signed by all the partners for it’s validity. Partnership deed covers all the information regarding registration of new partnership like name and address of business, the capital contribution of partners etc.
According to partnership act 2020,“For the registration of partnership firm, the partnership deed must be submitted along with registration form before registration.”
Contents of Partnership Deed.
i) Name and address of the firm:- The name and address of the firm should be clearly mentioned in partnership deed. The name of the firm should not mention with the name of other firms of similar nature of business.
ii) Name and address of partners:- Partnership firm is the collective name of partners & it is essential to contains the name and address of each partners in partnership deed.
iii) Nature of business:- It is very necessary to mention nature of business in the partnership deed whether it is industry, trade or service sector.
iv) Duration of the partnership:- A partnership may be established either for a fixed duration of time or for uncertain period. Therefore, the duration of the firm should be clarified in partnership deed.
v) Capital contribution:- The amount of contribution as capital contributed by all the partners to establish the firm must be clearly written in the partnership deed.
vi) Interest on capital:- The interest rate on capital must be clearly mentioned in the partnership deed so that any misunderstanding do not arise among the partners.
vii) Proportion of division of profit or loss:- The proportion of division of profits and losses should be clearly mentioned in partnership deed.
viii) Drawing of partners and interest thereon:- The partnership deed contain the amount which can be withdrawn by each partner.
ix) Partner’s salary and commission:- One or more partners involve actively in business. In such situation, it is necessary to determined salary and commission of active partners in partnership deed.
x) Right and duties of partners:- Right and duties of the partners should be clearly mentioned in the partnership deed so that in the absence of each other do not arise any misunderstanding between partners.
xi) Method of keeping account and audit:- The process of preparing the account and the provision of audit is to mention in the partnership deed clearly.
xii) Name of bank and authority for signing in cheque:- The name of the bank for financial transaction and the name of the partners who are responsible for authorized signature on cheque should be clearly stated.
xiii) The effect of admission and retirement of partners:- Some partners may be retired and new may be hired. So, the procedure for the admission and retirement of the partners should be mentioned in the partnership deed.
xiv) The effect of death of partners:- The adjustment at the death of the partners and the payment for their success should be maintained clearly in the partnership deed.
xv) Valuation of goodwill:- The procedure for the valuation of goodwill during the admission, retirement and death should be clearly mentioned in partnership deed.
xvi) Revolution of assets and liabilities:- The procedure of revolution of assets and liabilities at the time of admission, retirement or death of partners should be clearly mentioned in partnership deed.
xvii) Settlement in case of dissolution:- The method of the dissolution of the partnership firm and the settlement of the partnership firm and the settlement of the partnership firm and the settlement of account should be clearly mentioned in the partnership deed.
xviii) Provision for arbitration in case of dispute:- When a dispute arises among partners, it becomes difficult to settle without the investment of a third party. Thus, in partnership deed, the method of appointment of arbitration and his right should be clearly mentioned.
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