Partnership Company Registration In India

A partnership is a form of business entity in which two or more persons come together to carry out business and share the resulting profits in an agreed ratio.

Partnership formation is the most prevalent type of business formation in India due to its easy formation and minimal compliance regulations.

If you are a partnership company and in a dilemma to get is registered or not, here is everything you should know about partnership company registration in India in either case.

There are two types of partnership firms in India:

• Registered partnership
• Unregistered partnership

According to the Indian Partnership Act, 1932, the only criterion to carry out a partnership business is the presence of a partnership deed between partners. There is no immediate requirement for a partnership firm to be registered under the Act.

Moreover, there are no penalties if you wish you have an unregistered Partnership firm. Also, a partnership firm can be registered any time after its formation.

Partnership Deed

So, the first step of creating a partnership firm is the formation of the Partnership Deed. It acts as an official agreement between the partners and entails all the necessary details related to it like their rights, duties, profit sharing ratio, liabilities of each partner etc.

It can be in a written form or oral. However, it’s always advisable to have a written partnership deed so that it can act as evidence in the future in case of conflicts and distortion.

Here are what all is included in a partnership deed:

General details:

• Name and address of all the partners and the firm
• Capital contributed by each partner
• Starting date of the capital to be contributed
• Profit and loss sharing ratios among the partners

Specific details:

• Interest on capital invested by partners
• Amount of drawings allowed to each partner
• Amount of loans provided by the firm to partners
• Salaries, commission, and other amounts payable to partners
• Rights of each partner
• Duties and obligations assigned to each partner
• The process to be followed on the retirement or death of a partner or dissolution of firms
• Other additional clauses that deemed fit

Should You Get Your Partnership Firm Registered?

Though it's at the discretion of the partners to get a partnership firm registered, it is advisable to get it registered to enjoy certain special benefits the unregistered firm is devoid of.

Here are some of the limitations of unregistered partnership firms:

• In an unregistered partnership, a partner cannot file a suit against the firm or against other partners of the firm in case of wrong enforcement of rights or any other reason of conflict. A registered partnership firm can enjoy such benefits under the Partnership Act.
• Also, the partnership firm cannot file a court in a court of the law against third parties as well if the firm is unregistered.
• The partners of the firm are also not allowed to claim set off in a dispute with third parties.

Therefore, it is beneficial to get your partnership firm registered during the course of time, if not immediately.

How To Get The Partnership Firm Registered?

A partnership firm is registered under Section 58 of the Partnership Act, 1932. The registration is done by the Registrar of Firms of the state in which the partnership firm is located.

The Registrar of Firms sees that all the compliances related to section 58 are fulfilled; it then keeps the record of the same and issues the certificate of the registration to the firm.

Documents to be submitted to the Registrar of Firms:

• Form 1 regarding application for registration of partnership
• Specimen of affidavit
• Original certified copy of partnership deed
• Proof of where the firm is placed (sales deed/ rental agreement/ lease agreement/ utility bill)
• Identity and address proof of the partners (pan card/ passport/ driver’s license/ Aadhar card/ Voter’s ID card)

FAQs

1. How much time does it take to get a partnership firm registered?

The period may vary from state to state. It also depends on the time in which the letter of incorporation is issued.

Generally, it can take about 12 to 14 working days to get a firm registered in India.

2. On what grounds my partnership firm can be held invalid?

• When the name of the partnership firm is identical to an existing firm
• If the name includes words like the emperor, prince, crown etc.
• If the object of the business is illegal

3. Can Certificate of Registration be cancelled?

Certification of Registration is cancelled when the partnership is dissolved. A partnership firm can be dissolved when all the partners of the firm except one gets insolvent or when the firm has been carrying an illegal business all this time.