Understanding importance of registeringpartnership deed and well drafted deed

 

 

WHILE doing a business, the entrepreneur has to choose the structure under which it shall function. The broad categories are soleproprietorship, partnership firm and corporate; where partnership firm being one of the most common types of entity found in Maharashtra. It is important to have a well-articulated partnership deed in place and registering it with the Registrar of Firms. Partnership Firm registration is governed under The Indian Partnership Act, 1932 and it can be registered online through the government website https://rof.mahaonline.gov.in/. Trademark, Udyam, GeM, Startup India registration are some of the registrations suggested for partnership firms for establishing its credibility, building a brand and taking benefits of various government schemes.

 

The registration helps to gain legal recognition that is essential for legal proceedings and business transactions, it ensures clarity in terms of roles and responsibilities and profit-sharing amongst the partners and enhance their credibility with customers and financial institutions. Partners can file a suit of action against third party or other partners of the firm and secure a solid foundation for their business ultimately fostering trust and facilitating smoother operational processes. A well drafted partnership deed not only ensures smooth operations of the business but also helps in mitigating potential risks and threats in the business. If you are registering a partnership deed or already have one in place then here are some of the important clauses for you to check in it other than the basic ones like name and object of the firm:-

 

1) Capital contribution and profit sharing clause which defines each partner’s financial stake and reward in the business. 2) Management roles and responsibilities clause is vital to ensure tasks are effectively delegated, conflicts are better managed and accountability is enhanced. 3) The Addition or Removal of Partners Clause is imperative for adjusting the firm’s structure and resource pool to secure operational stability. 4) Arbitration clause is one of the most important clauses, it saves cost and time as compared to going into litigation resulting in a quicker resolution while maintaining privacy and confidentiality when a dispute arises. However, since registration of Partnership Firm is not compulsory in Maharashtra, there are lot of people still working as unregistered ones and thus not taking optimum advantage as a partnership deed that is not registered or is not drafted well is like a house without a roof, having no safety or protection for its users and limiting their potential and growth. For details readers may contact the author at sarrahkatawala@connect2comply.com. ( The author is a Practicing Company Secretary and she may be contacted at sarrahkatawala@connect2comply.com)