Home » Articles » All About a Partnership Deed

All About a Partnership Deed

What is a Partnership Deed?

A Partnership Deed is is a written legal document that consists of an agreement between two or more individuals who would like to manage and operate a business together in order to make a profit. It is a detailed Legal charter that dictates all the rights and functionalities of the partners in a Business venture. 

A Partnership Deed is the most important document required while entering into a partnership. Although a it can be an oral or written, an agreement for partnership needs to be written.

Why is Partnership Deed required?

A few important advantages of a well-drafted partnership deed are:

  • It regulates the rights, duties, and liabilities of each partner.
  • It helps to avoid any misunderstanding between the partners because all the terms and conditions of the partnership have been laid down beforehand in the deed.
  • Any dispute between the partners may be settled easily as the partnership deed may be readily referred to.
  • It clears confusion as to what should be the profit and loss sharing ratio between partners.
  • It clearly mentions who does what. Individual partner’s roles can be defined.
  • It can also contain clauses which clarifies what should be remuneration (salary) to partners. Usually, remuneration is paid to working partners. However, interest payment is done to all partners who have brought in capital in the business.

What Does a Partnership Deed Contain?

A Partnership Deed consists of the below mentioned components that are required to be duly filled by the members in order to register their firm as a partnership.

  • Name and addresses of all partners
  • Date of establishment of partnership firm
  • Capital contribution by each partner
  • Guidelines for the operations of bank accounts
  • Profit and loss sharing ratio of each partner
  • Interest rate on borrowed capital or loan
  • Rights and duties of each partner
  • Rules for settlement of disputes among partners
  • Rules in case of admission, retirement, or death of a partner
  • Any other aspect regarding the code of conduct of business

What is the Legal Considerations for Partnership Deed?

Partnerships in India are governed by the Partnership Act 1932. The Partnership Deed created by and between the partners is required to be stamped properly, in accordance with the Indian Stamp Act. Each partner should also have a copy of the partnership deed. A copy of the deed must be filled with the registrar of the firm if it is being registered. Even though it is not mandatory to register a partnership firm, it is recommended to register the same due to the several benefits that registration offers.

For more details contact out team at +91-7991109093 or drop email us at [email protected]

Note: This Post was last updated on November 23, 2022

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation i.e. November 23, 2022. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, We assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. We assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL WE SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.

Avatar photo

Founder & Director | COO & CHRO at eTaxFinance | Content Writer at eTaxFinance Blog | Department Head for Intellectual Property & Startup Team | Head-Corporate Strategy and Planning