Refer here for preparing your deed.
PARTNERSHIP DEED
This DEED OF PARTNERSHIP is entered into at ____________, _________, India on this the Xth day of ________, 202X (hereinafter, the “Effective Date”);
BY AND BETWEEN
Mr. ABC, aged XX years, S/o. DEF, bearing PAN No: XXXXX9999X & Aadhar Number: XXXX-XXXX-XXXX and residing at “______________________________________________________________________________________” (hereinafter referred to as the “First Partner” which term shall unless expressly excluded, include all representatives, successors and assigns);
AND
Mr. XYZ, aged XX years, S/o. LMN, bearing PAN No: XXXXX9999X & Aadhar Number: XXXX-XXXX-XXXX and residing at “__________________________________________________________________________________________________________________” (hereinafter referred to as the “Second Partner” which term shall unless expressly excluded, include all representatives, successors and assigns);
Each of the parties shall be individually referred to as "Partner" or “Party” and collectively as "Partners" or “Parties”.
WHEREAS the above-named Partners have decided to start a partnership business in the name of “ABCXYZ & Co” (hereinafter referred to as "Firm").
WHEREAS the Firm jointly owned by the Partners shall be engaged in, including but not limited to, the following services;
i. To carry on the business as ___________________________________________________________________________________.
ii. To pursue __________________________________________________________________________________________________________________________________________________________________________________________________________________
iii. To purchase _____________________________________________________________________________________________________________________.
iv. To carry any manufacturing or service activities or any other activities as the partners may agree to (“Services”)
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of promises and the mutual covenants, agreements and conditions herein contained, it is hereby covenanted, agreed and declared by and among the Partners as follows:
1. INTRODUCTION
a. Definitions
In this Agreement (as defined herein), unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the respective meanings ascribed below:
“Accountants” shall mean such firm of accountants as the Partners may from time to time determine to be the accountants of the Partnership;
“Agreement”, “this Agreement”, “hereto”, “herein”, “hereby”, “hereunder” and similar expressions refer to this Agreement in its entirety and includes any and every instrument supplemental or ancillary to it;
“Business” Shall mean the business of owning and operating under the name of “ABCXYZ & CO” and other general business activities related thereto:
“Business Expenses” shall mean the expenses incurred in carrying out the business of the firm and shall include the expenses involved in matters ancillary to the business of the firm such as the Advance/Security deposit paid on the principal place of business.
“Financial Year” shall mean the period ending on 31st March;
“Partner” shall mean any of the partners under this Agreement and any other partner admitted pursuant to the provisions of this Agreement, and the “Partnership” shall mean the partnership established for services mentioned above in this deed.
“Person” shall mean any individual, firm, corporation, partnership, joint venture, trustee or trust, government or agency thereof, unincorporated association, and other juristic people.
b. Number and Gender
Words importing the singular include the plural and vice versa, and words importing gender include all genders.
2. FORMATION OF PARTNERSHIP
a. Establishment
Subject to the terms and conditions hereof, the parties hereto agree to carry on the Business in partnership at “_______________________________________________________________________________________________________________________________________________________________”.
b. Name and Purpose
i. The name of the Partnership shall be “ABCXYZ & Co” and the Firm shall be entitled to undertake and perform all activities as are ancillary to, and/or necessary for it to carry on, the business of the partnership as above contemplated, in accordance with applicable laws.
ii. For the purpose of carrying on the business of the Firm, the Partners have taken on the following designations:
● Mr. ABC - Managing Partner
● Mr. XYZ - Partner
c. Place of Business
The place of business of the Firm shall be at, “________________________________________________________________________________________________________________________” or other places as the Partners shall from time to time hereafter determine, evidenced by way of an amendment to this Agreement.
d. New Partners
No person shall be admitted as a Partner except with the unanimous consent, in writing, of partners having share more than ________% in the Firm.
e. Duration of the Agreement
The term of this Agreement shall commence from the Effective Date and shall be at will unless terminated by mutual consent of the partners or by operation of the provisions of the law or this Agreement.
3. FINANCIAL MATTERS
a. Capital Contributions and Financing Requirements
The initial contribution of the Partners to the capital of the Firm shall be as follows:
Names | Investment (Rs.) | Percentage of share in profit |
Mr. ABC | XX,XX,XXX/- | 50.00% |
Mr. XYZ | XX,XX,XXX/- | 50.00% |
Total | X,XX,XX,XXX/- | 100.00% |
b. The following provisions shall apply in respect of the capital contribution of the Partners:
1. The assets of the Firm shall belong to the Partners in the proportion contributed by each Partner;
2. No Partner shall be entitled to interest on the amount of their initial capital contribution to the Partnership.
3. The partners shall be entitled to increase or decrease the above profit-sharing ratio and may agree to pay remuneration to the partner or partners. The parties hereto may also agree to revise the mode of calculating the remuneration and decide to pay salary and grant the benefit of house rent allowance, medical expenses, accident and/or Life Insurance Policy Premium, Provident fund, gratuity, bonus, commission and/or other benefits/perquisites to the above and/or the other partner or partners either on monthly, yearly or any other basis as they may mutually agree upon.
4. The Partners may further contribute and withdraw capital as and when considered necessary and expedient for the purpose of carrying on the business and the same may carry interest at 12% (Twelve Percent) per annum or such other rate as may be mutually agreed upon by the parties hereto from time to time. The partners hereto shall be entitled to draw out in advance, against their drawing accounts of such sums from time to time as may be mutually agreed upon and on taking account for the year, the excess, if any, drawn by any partner over his share of the profits shall be refunded to the firm within a period of three months or may be treated as loan to that partner which may carry interest at 12% (Twelve Percent) per annum or any other rate mutually agreed upon. Interest on any loan given to the partners shall be paid with an interest of up to 12% per annum.
5. For smooth and effective running of business, any fund required would be met by the partners either by way of infusion of capital or as a loan. In the event of a Partner being unable to contribute to the capital requirements of the Firm, as above contemplated (referred to as “the Non-Contributing Partner”), the capital required shall be raised by the Firm by availing debt from a third parties. In the event of the Firm being unable to raise the required capital by such third-party debt, either wholly or in part, it shall be open to the other Partners (referred to as “the Contributing Partners”) to contribute the shortfall in the capital required. Such contribution by the Contributing Partners shall not affect the division of share in the Partnership, or in the profits and loss of the partnership between the Partners.
6. Provided that the Contributing Partner(s) shall not borrow loans on behalf of the firm without the previous written authorization by the Partners.
7. No partner or the firm shall be liable and/or responsible for the personal debt and/or liabilities of any other partner or partners.
c. Profits and Losses
1. At the end of each Financial Year, all items of income and gain, and expenses and loss of the Partnership shall be determined by the Accountants of the Partnership.
2. Until otherwise unanimously agreed by the Partners, and subject to the provisions of this Agreement, the net profits, if any, of the Partnership as determined at the end of each such Financial Year shall be divided among the Partners in the following manner:
Partner | Share in profit | Share in loss |
Mr. ABC | 50.00% | 50.00% |
Mr. XYZ | 50.00% | 50.00% |
Total | 100% | 100% |
3. All expenses incurred in the course of the Business and all losses, if any, arising thereof shall be borne out of the earnings of the Business, or in the case of a deficiency, the losses shall be allocated amongst the Partners in the manner set out above.
4. All losses occurring in the course of the business shall be borne in the proportion set out above unless the losses are occasioned by the willful neglect or default, and not mere mistake or error, of any of the partners, in which case the losses so incurred shall be made good by the partner through whose neglect or fault the losses shall arise.
5. The partners shall be entitled to modify the above terms relating to remuneration, interest etc., payable to the partners by executing a supplementary deed, and any such deed when executed shall have effect, unless otherwise provided, from the first day of the accounting period in which such supplementary deed is executed and the same shall form part of this deed of partnership.
d. Encumbrance of Partnership Interest
No partner shall, without the previous written consent of the other partners, sign or encumber his share or interest in the Partnership
e. Payment of Obligations
Each of the Partners shall punctually pay and discharge his/her separate debts, liabilities, obligations, and duties whether at present or arising in the future and keep indemnified the Partnership property and the other Partners from all actions, proceedings, costs, claims and demands of every nature, not connected to that of the business of the firm.
f. Performance
All Partners shall be working partners and take active part in the day-to-day conduct of the business of the firm. Each Partner shall apply all of his experience, training and ability in discharging his assigned functions in the partnership and in the performance of all work that may be necessary or advantageous to further the business interests of the partnership.
g. Obligations of the Partners
Each Partner shall:
i. Punctually pay his personal and separate debts and indemnify the other partners and the assets of the Firm against the same and pay all expenses on account thereof.
ii. Forthwith pay all moneys, cheques, negotiable instruments received by him on account of the Firm into the Partnership Bank Account or Accounts;
iii. Be just and faithful to others and at all times give to each other full information and truthful explanations of all transactions relating to the Firm’s business;
iv. At all times give to the others a just and faithful account of the same and also upon every reasonable request furnish a full and correct explanation thereof;
v. Afford every assistance and co-operation in his power and use his best skill and endeavour in the conduct, promotion and execution of the services of the Firm for their mutual advantage and benefit; and,
vi. No partner shall divulge any information of the partnership or of its clients to any person outside the purview of the Firm.
h. Salary
The first partner shall be entitled to a salary up to Rs. XX,XX,XXX/- (Rupees _____ Lakhs) per month, and the second partner shall be entitled to a salary up to Rs. XX,X,XXX/- (Rupees ____ Lakhs) per month. The salary shall be determined by the mutual decisions of the partners. The partners shall also be entitled to bonus and commission at a rate as will be mutually determined and fixed by the partners at the end of the year. The partners shall also be entitled to draw interest on capital at a percentage not exceeding 12% per annum. The aggregate salary, bonus and commission per year shall not exceed the limit as fixed by the Income Tax Act, 1961 as amended from time to time. The quantum of salary can be increased or decreased to a sum as mutually decided by the partners. Any drawings by the partners as salary, bonus or commission in excess of the permissible limit as fixed by the Income Tax Act, 1961, as amended from time to time, shall be refunded to and/or adjusted in the accounts at the close of the year and will be debited to their respective capital account/s as mutually agreed by the partners.
i. No Partner to act as Security for other businesses
No partner shall enter into any bond or become surety, security bail, or co-sign for any person, partnership or corporation, or knowingly condone anything whereby the partnership, the property may be attached or be taken in execution, without the written consent of the other partners.
j. Development/ Investment on profit:
Notwithstanding any other provision of this Agreement, the profits generated by the firm shall not be shared between the partners, if there are any development/investment-related expenses to be incurred for the business of the firm.
4. MANAGEMENT
a. Management
Final authority, management and control of the business and affairs of the Partnership shall vest with all the Partners, jointly. Any decision for the firm shall be passed by partner having a stake of more than XX% in the Firm.
b. The Powers of the Partners
The powers of the Partners may be exercised by a Resolution passed at a meeting of the Partners or by a Resolution consented to by the signatures of the Partners.
c. Delegation of Authority
The Partners may at any time and from time to time, by way of a resolution passed at a meeting of the Partners, delegate any power or authority relating to the management of the business and the affairs of the Partnership to any Partner, and the exercise of any such authority by such Partner shall be valid and binding upon all Partners until such power or authority has been rescinded by resolution passed in unison by the other partners.
d. Place of Meeting
Meetings of the Partners shall be held at the principal office of the Partnership, or, at such other place as the Partners may, by unanimous agreement, determine.
e. Calling of Meetings
Meetings of the Partners shall be held from time to time at such time and on such day as any Partner may determine and intimate to the other Partners.
f. Banking Arrangements
The Partners agree that the Partners can open a bank account for the Firm in any bank and such bank account shall be operated by the First Partner. All moneys or negotiable instruments received from, on behalf of and/or on account of the Firm shall be paid/deposited into such banking account or accounts in the name of the Partnership Firm. The account shall be operated by the signature of ABC.
g. Books and Records
Books of accounts shall be maintained by the partners, or designated accountant/ chartered accountant and proper entries made therein of all sales, purchases, receipts, payments, transactions, and property of the partnership, and the books of account and all records of the partnership shall be retained at the principal place of business as in Item.
h. Employee Management
No partner shall hire or dismiss any person in the employment of the partnership without the consent of the other partners.
5. DETERMINATION OF PARTNERSHIP
a. General
Except as expressly permitted in this Article, or as otherwise unanimously agreed to in writing by the Partners, no Partner may sell, assign, convey, transfer, mortgage, charge or otherwise encumber all or any part of its share or interest in the Partnership.
b. Dissolution
1. The Partnership shall be dissolved at any time by unanimous resolution of the Partners passed at a meeting of the Partners called for that purpose. The Partnership may also be terminated by unanimous agreement in writing signed by all of the Partners.
2. On dissolution of the partnership the following things shall be addressed:
● All Assets of the Firm
● Reserved cash
● Liquid cash
● Advance paid towards the Office, House, Deposits made for the purpose of the entity
● All Debts of the Firm
3. Each of the aforementioned shall be divided equally among the investors either by selling (or) dividing the assets according to the value of the assets. The selling amount of each asset shall be approved by all the investors with respect to the depreciation amount. This provision is subject to sub-clause 5(c).
c. Determination
In the event of the dissolution of the Partnership, the Partnership shall terminate and a proper accounting shall be made of the capital and income accounts of each Partner and the profit or losses of the Partnership up to the date of dissolution by the Accountants. The assets of the Partnership shall be liquidated and the proceeds of such liquidation shall then be distributed as follows unless the Partners otherwise unanimously agree:
Firstly, to repay all costs, debts, expenses, liabilities and obligations of the Partnership;
Secondly, to pay to each Partner's share of the capital; and
Next, to divide the surplus, if any, between the Partners in the proportions in which they are entitled to share in profits.
In the event that such liquidation proceeds shall not be sufficient to satisfy the liabilities of the Partnership, each of the Partners shall contribute pro rata, as determined in accordance with their individual share in the business of the Partnership.
d. Agreements with Transferees
In the event that any Partner (in this sub-clause 5(d) called the “Transferor”), pursuant to the terms and conditions hereof, purports to transfer all, but not less than all, of his interest or share in the Partnership to any Person (such Person in this sub-clause 5(d) called the “Transferee”), then no such transfer shall be made or shall be effective until the Transferee enters into an agreement with the other Partners hereto whereby the Transferee agrees to assume and be bound by all of the obligations of the Transferor and to be subject to all of the terms and conditions of this Agreement.
e. Rights of Continuing Partners
On the retirement of any partner, the continuing partners shall be at liberty, if they so desire, to retain all trade names designating the firm name used, and/or each of the partners shall sign and execute assignments, instruments, or papers that shall be reasonably required for effectuating an amicable retirement.
f. Release of Debts
No partner shall release, or discharge any debts that owed to the firm, without receiving the full amount thereof, unless that partner obtains the prior written consent of the other
g. Additions, Alterations & Modifications
Where it shall appear to the partners that this agreement, or any terms and conditions contained herein, are in any way ineffective or deficient, or not expressed as originally intended, and any alteration or addition shall be deemed necessary, the partners will enter into, execute, and perform all further deeds and instruments as required. Any addition, alteration, or modification shall be in writing, and no oral agreement shall be effective.
h. Additions, Alterations & Modifications to business
Any changes in the firm, modifications to the infrastructure development, etc. shall not be implemented without the mutual consent of all partners.
6. GENERAL
a. Headings
The headings of any Article, Section or part thereof are inserted for purposes of convenience only and shall not be considered in the interpretation of this Agreement.
b. Severability
The invalidity or unenforceability of any particular provision of this Agreement shall not affect any other provision hereof, but this Agreement shall be construed and enforced as if such invalid or unenforceable provision was omitted.
c. Amendments
No amendment, alteration, change, qualification or modification of this Agreement shall be valid unless it is in writing and signed by each Partner hereto and any such amendment, alteration, change, qualification or modification shall be adhered to and have the same effect as if they had been originally embodied in and formed a part of this Agreement.
d. Further Assurances
The Partners hereto, covenant and agree that each of them shall and will, upon reasonable request of the other Partners, do, execute or cause to be done or executed all such further and other lawful acts, deeds, things, whatsoever for the better performance of the terms and conditions of this Agreement.
e. Death of a Partner
The death, insolvency or lunacy of any partner shall not automatically dissolve the Partnership, and the other partner shall continue the firm by adding more partners. In the event of the death of one partner, the legal representative of the deceased partner shall remain as a partner in the firm. The original rights of the partners herein shall accrue to their heirs, executors, or assigns.
f. Retirement
i. In the event any partner shall desire to retire from the partnership, he or she shall give 3 (Three) months’ notice in writing of such intent to the other partners and on expiration of three month from the date of such notice, he shall cease to be a partner. The continuing partners shall pay to the retiring partner at the termination of the notice the value of the capital invested by the partner and interest of the retiring partners in the business of the firm. This payment shall be made in parts, within a period of one (01) year after such retirement.
ii. The retiring partner shall hand over the property of the Firm under his possession and/or any other books/documents etc. belonging to the Firm or any of its clients, to the remaining Partners. Upon due receipt of the aforementioned, the Firm shall issue to the retiring Partner a “no claim receipt” to this effect. On retirement, a retiring Partner shall not in any way interfere with the business of the Partnership.
g. Governing Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with the laws of India. Each party hereby irrevocably submits to the exclusive jurisdiction of the courts of _________, India for the adjudication of any dispute hereunder or in connection herewith.
h. Dispute Resolution
i. In respect of matters not specifically provided herein, the Firm shall be governed by the provisions of the Indian Partnership Act, 1932, as amended from time to time.
ii. Any dispute or difference arising between the parties hereto in relation to the affairs of the Partnership Firm or in regard to construction of any clause hereof in relation to the rights, duties and obligations of the parties hereto shall be referred to arbitration. An arbitrator shall be appointed, who shall enter upon the reference and decide the matter. Any award given by such arbitrator shall be final and binding on the parties hereto subject to the provisions of the Arbitration and Conciliation Act 1996.
i. Personal Spending
Any and all of the assets of the firm shall not be treated as personal property by any of the partners. None of these items shall be given as a gift (or) for free, without consideration by any Partner. In case this is done, such a partner shall bear the cost.
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the date first above written:
Signature: _________________
Name: Mr. ABC
Date: ___________________
Signature: ________________
Name: Mr. XYZ
Date: ____________________
Witness 1:
Signature: _________________
Name: ____________________
Address: __________________
_________________________
Date: _____________________
Witness 2:
Signature: _________________
Name: ____________________
Address: __________________
_________________________
Date: _____________________
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