Partnership
- Art Teacher
- London, UK
- 5-7 Hrs
Planning on opening a business with a friend or coworker? A Partnership Firm could be the way to go! Basically, a partnership is an agreement among two or more individuals who get together to operate a business and share the profits. The partners may be persons, companies, or even other legal bodies. The charm of a partnership is the versatility it provides — from how the business is governed to how the profits are split.
The Section 4 of the Indian Partnership Act, 1932 defines partnership as “the relationship between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.”
- Application for registration of partnership (Form 1)
- Certified original copy of Partnership Deed.
- Specimen of an affidavit certifying all the details mentioned in the partnership deed and documents are correct.
- PAN card and address proof of the partners.
- PAN card and address of the firm.
- Proof of principal place of business > (ownership documents or rental/lease agreement).
- Fill Registration Form (Form 1): Get it from the Registrar of Firms office or download it from your state’s official website.
- Choose a Firm Name: Pick a unique name that’s not too similar to existing businesses. Avoid names suggesting government approval (like “Crown” or “Empire”).
- Submit Application: Submit the signed form along with the required fee and documents to the Registrar.
- Get Registration Certificate: If everything is in order, the Registrar will register the firm and issue a Registration Certificate.
FAQs
No, registration of a partnership firm is not mandatory under the Indian Partnership Act, 1932. Registration is optional and entirely at the discretion of the partners. However, registration provides significant legal benefits.
An unregistered partnership firm cannot sue a third party in a court of law to enforce contractual rights, and partners cannot sue each other or the firm. However, the firm can be sued by third parties even if it is not registered.
A foreign national may become a partner in accordance with FEMA, RBI, and government approval as required.
RBI approval is generally required for foreign nationals to invest in or become partners in an Indian partnership firm. Such investments come under Foreign Direct Investment (FDI) policy and are regulated by FEMA and RBI guidelines.
Sectoral restrictions apply under India’s FDI policy. Some sectors may be fully open to foreign investment, some may have caps or require government/RBI approval, and some sectors are prohibited.
A company (body corporate) can be a partner in a partnership firm, subject to its own incorporation documents permitting such investment.
The partnership firm, not being a separate legal entity, cannot own property in its own name; property is held in the names of partners, though the firm may use and control it for business purposes.
- Notarization involves the documents being certified by a notary public in the foreign country.
- Apostille is an additional authentication provided under the Hague Convention; the relevant government authority applies this if the country is a party to the Apostille Convention.
- If the country is not a party to the Hague Convention, documents must be consularized by an Indian Embassy/Consulate.
This process ensures that overseas documents are recognized as legally valid in India for company incorporation.
A partner may assign their share, but the assignee does not become a partner automatically (Section 29). They’re only entitled to the assignor’s share in profits.
A partnership firm has no separate legal entity from its partners—legally, it is a collective of its partners.
Any person (resident or non-resident) who is a partner in a firm carrying on business in India must obtain a PAN, as per Indian tax laws.