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It is not compulsory to register the firm. However there are serious effects of non-registration.
No suit to enforce a right arising from a contract or conferred by the Indian Partnership Act shall be instituted in any court by or on behalf of any person suing as partner in a firm against the firm or any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm, unless the firm is registered and the person suing is or has been shown on the Register of firms as a partner in the firm.
Similarly, no suit to enforce a right rising from a contract shall be instituted in any court by or on behalf of a firm against any third party unless the firm is registered.
PROCEDURE FOR REGISTRATION
The registration of a firm may be effected at any time by sending by post or delivering to the Registrar of Firms of the area in which any place of business of the firm is situated or proposed to be situated, a statement in the prescribed form and accompanied by the prescribed fee, stating:
- the firm name;
- the place or principal place of business of the firm;
- the names of any other places where the firm carries on business;
- the date when each partner joined the firm;
- the names in full and permanent addresses of the partners; and
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the duration of the firm.
The statement shall be signed by all the partners or by their agents specially authorised in this behalf. Each person signing the statement shall also verify in the manner prescribed.
A firm name shall not contain any of the following words viz. "Crown", "Emperor", "Empress", "Empire", "Imperial", "King", "Queen", "Royal", or words expressing or implying the sanction, approval or patronage of Government, except when the State Government signifies its consent to the use of such words as part of the firm name by order in writing.
All the States have framed rules prescribing the forms, fee for registration and verification of the statement. The application for registration has to be made to the Registrar of Firms in the prescribed form.
When the Registrar is satisfied that the provisions have been complied with, he shall record and entry of the statement in a register called the Register of Firms and shall file the statement. The Registrar is the competent authority and if he acts bona fide and follows the procedure, his satisfaction cannot be challenged.
CHECKLIST FOR DRAFTING A PARTNERSHIP DEED
A partnership deed should contain the following clauses
- Name of the parties
- Nature of business
- Duration of partnership
- Name of the firm
- Capital
- Share of partners in profits and losses
- Banking, Account firm
- Books of account
- Powers of partners
- Retirement and expulsion of partners
- Death of partner
- Dissolution of firm
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Settlement of disputes
How to draft a Partnership Deed |
