What is the partnership deed and how to make it?

A partnership is a business where an agreement between two or more people is made. A partnership deed is a partnership agreement between the firm's partners, So let us know how to make an agreement of partnership.

Agreement of Partnership

This agreement of partnership is executed amongst the following persons.

The above persons are jointly referred to as partners. In the expression of the terms in the agreement, the person shall mean and include their legal heirs, successors, executors, administrators, assigns, representatives, etc.

Persons agree as follows

1. The partners by mutual consent may carry on business or profession at such other premise or premises, in such other name or names, and of such other nature or natures, as they may deem fit and proper from time to time.

2. The partners shall contribute the capital required for the commencement of business or profession at their convenience.

Further capital, loans, or deposits looking to the needs of the partnership firm shall be arranged, invested, or contributed by the partners.

3. The partners shall be distributed the net profits or losses in the following ratios.

4. Interest at the rate of 12% per annum or as may be prescribed under section 40(b)(iv) of the Income Tax Act, 1961 or any other applicable provisions as may be in force or at a lower rate as may be agreed to by and between partners from time to time shall be paid to the partners or credited to the partners on the amount standing to the credit of the account of the partners.

Such interest shall be considered an expense of the firm and shall be debited to the profit and loss account of the partnership firm before arriving at the distributed profit or loss.

The interest to persons other than partners shall be paid or credited to their accounts at the rate or rates as may be agreed to by and between the partners and such persons from time to time.

5. The partners have agreed to attend to the affairs of the business or profession of the partnership firm as working partners and decided to keep themselves actively engaged in conducting the affairs of the business or profession of the partnership firm. The services rendered shall be paid monthly or yearly remuneration mutually decided by the partners.

However, maximum remuneration to the partners shall be the amount so computed in the manner laid down under section 40(b) of the Income Tax Act, 1961.

6. The partners hereto may admit a new partner or partners only with the consent of all the existing partners.

7. The following provisions shall apply in the case of retirement, death, or insolvency of any partner of the firm.

• Any partner of the firm shall be entitled to retire from the partnership firm by giving at least 30 (Thirty) days of written notice to other partners and upon expiry of the period of such notice, the concerned partner would be considered as retired automatically from the partnership firm.
• In the case of the retirement of any partner of the firm, the continuing or surviving partners of the firm shall pay to such an outgoing partner or to his or her legal representatives as the case may be the amount standing to his or her credit in the books of the firm after making necessary adjustments in respect of the profits and loss of the partnership firm up to the date of the such event arrived on a time basis.
• In the case of the death of any one or more partners, the firm shall not be dissolved but shall continue to be carried on by and between the surviving partners and legal representatives of the deceased partner, as a continuing concern, on the same terms and conditions as may be agreed to by and between them from time to time.

8. The partnership has been and shall be a partnership at “will”.

9. The partnership firm can take franchises or distributorship of any goods or services or firm having business ancillary or incidental to the business with the mutual consent of partners.

10. The partners hereto shall be true and faithful to each other and shall not do or cause to be done anything which may be detrimental to the interest of the partnership firm.

11. The partners shall keep or cause to keep proper books of accounts. Each and every partner shall have the right to have access to and to inspect and take copies of the same. The books of accounts shall be closed on the 31st day of March each and every financial year.

12. The bank account or accounts have been and shall be opened in the name of the partnership firm and shall be maintained and operated with the signature of any one partner or partners.

13. The partners in this deed are partners in their individual capacities. The partners do not represent any other person.

14. The partners shall be entitled to modify the above terms and conditions relating to this deed by executing a supplementary deed.

15. Will respect to any matter connected with the affairs of the partnership firm, which is not specifically provided for herein, the partners may take such agreements therefore and may set in such manner with regard thereto as may be agreed upon by and between themselves.

16. That all disputes and questions in this connection with the partnership or this deed arising out among the partners or between any one of them and whether during or after the partnership, shall be referred to the arbitrator in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification thereof.

17. All terms and conditions not included above the Partnership Act, 1932, will apply.

18. This agreement is made on the following stamp paper.

Persons have read and understood this agreement and solemnly affirm that the information above is true and correct and agreed to acknowledge the same without any pressure from any side and provide the signatures.