What are the essential contents of a Partnership Deed ?

Partnership is formed by an agreement. The agreement nay be verbal or in writing or may be inferred from the conduct of the partners. To avoid future disputes and differences between the partners it is desirable to have a written agreement. The written agreement between or among the partners is known as “Partnership Deed” otherwise known as ‘Articles of Partnership’. It must be signed by all partners and stamped in accordance with the Indian Stamp Act. A partnership deed generally contains the following important particulars:

Contents

i. Names and addresses of the firm and each partners

ii. Nature of business to be carried on and the locally where business is to set up

iii. Duration of partnership, whether for a fixed period/job of not

iv. Capital contribution by the each partner

v. Profit sharing ratio among the partners

vi. Interest on capital, if any to be paid to partners

vii. Drawings and interest on drawings, whether permissible or not

viii. Loans and advances by partners to the firm

ix. Whether or not to pay salary or commission to partners How and who will manage the business

x. Methods of keeping accounts who and how to audit the accounts. Maintaining bank accounts

xi. The mode of admission and retirement of partners

xii. How to value the goodwill on admission, retirement and death of a partner

xiii. Method of settlement of accounts on retirement and death of a partner

xiv. Provision for arbitration in case of disputes

xv. The methods of dissolution of partnership firm

xvi. Settlement of accounts in case of dissolution of the firm