Partnership Act, 1932 defines the Partnersip in the following terms “the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.”
Two or more persons agreed to share the profits of a business carried on by all or any of them acting for all can form a partnership firm. Partnership Act, 1932 deals with all affairs relating to partnership firms such as dissolution of firm, retirement and death of partners and auxiliary issues.
In a partnership, each person contributes something to the business such as ideas, money, property, or some combination of these.
TYPES OF PARTNERSHIP
There are three types of Partnership, Management rights, profit share, and personal liability will depending on which of the partnership forms the business takes.
- General Partnership
- Limited Partnership
- Limited Liability Partnership
There are two or more owners In general partnership, that carrying out a business purpose, share equal rights and responsibilities. Each partner assumes full responsibility for all the business debts and obligations.
In limited partnership at least one partner accepts general partnership status, he has full personal liability for the business debts and obligations, while the other partners have limited liability to the amount of his business investment. The general partner retains the right to control the business while other limited partners do not take participate in management decisions. Both partners take benefit from business profit.
Limited Liability Partnership
In Limited Liability Partnership the partners are not responsible for the wrongful acts, debts or obligations of business of other partners, a partner can’t lose more than his or her investment for something another partner does.
REGISTRATION OF PARTNERSHIP
The partners of the firm can apply for the registration of Partnership before the Concerned Registrar along with following documents under the Partnership Act 1932.
The following Documents are required for registration of Partnership Firm:
- Original Partnership Deed.
- CNIC of all partners.
- Prescribed Form.
- Registration Fee.
The Documents are examined by Concerned Registrar if the registrar is satisfied, he records an entry of the statement in his office and issue a Registration Certificate, and if the registrar founds any discrepancy he issues notice.
NON REGISTERED PARTNERSHIP
Section 69 of the Partnership Act, 1932 defines the effects and consequences of Non Registration Partnership; non registration of partnership denies certain rights under this act:
- A partner of an unregistered partnership firm cannot file a suit in any court of law against the partnership firm or against other partners unless the firm is registered and the partner who sues is shown as partner of firm in the office of the Registrar.
- A Non registered partnership firm or any partner cannot file any suit in any Court of Law against anyone unless the firm is registered and the partner who sues is shown as partner of firm in the office of Registrar.
- A Non registered partnership firm or any partner cannot claim a set off/adjustment of debts or other proceedings against anyone in any Court of Law unless the firm is registered and the partner who sues is shown as partner of firm in the office of Registrar.
Partnership deed is a very important document, in which the details of the business, responsibilities and rights of all partners, the terms and conditions of business are stated.
The following details are necessary to be incorporated in the Partnership Deed:
- Name of all partners.
- Addresses of all partners
- The place of business of partnership firm
- The date of joining the partnership firm.
- The object of business.
- Duties and responsibilities of all partners.
- Financial Management and taxation of partnership firm.
- Ratio of profit and loss.
- Contribution of Capital.
- Termination of Partnership.
- Resignation of Partnership.
- Resolving disputes.
- Duration of Firm.
In partnership deed and in its registration process simple mistakes may prove quite costly, which is not in the benefit of setting up a new business. Our expertise in the procedures of registration of a Partnership Firm all over Pakistan, and relevant matters may help you to follow an appropriate method of making a Partnership according to the Partnership Act 1932.
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