The partnership deed is indispensible for partnership business. It is a document containing all the matters according to which mutual rights, duties and liabilities of the partners in the conduct and management of the affairs of the firm are determined.
It forms the basis of partnership agreement. Simply stated, a partnership deed is a written agreement among the partners stating the terms and conditions of partnership.
The deed should be duly stamped in accordance with the Indian Stamps Act. Each partner should possess a copy of the partnership deed.
Contents of Partnership Deed: A Partnership deed usually contains the following items.
- The name of the firm
- The names and addresses of all the partners
- The nature of the business to be carried by the firm
- The amount of capital to be contributed by each partner.
- The duration of partnership, if any
- The amount which can be withdrawn by each partner.
- The ratio of distribution of profits and losses among the partners.
- The rate of interest on capital and drawing made by the partners.
- The amount of compensation or salary payable to any partner for his services rendered to the firm.
- The mutual rights and duties of partners.
- Maintenance and audit of books of accounts.
- The loans and advances made by the partners to the firm and the rate of interest after dissolution.
- The procedure of dissolution and mode of settlement of accounts among the partners after dissolution.
- The methods of revaluation of assets and liabilities on admission, retirement and death of a partner.
- The procedure to the followed on expulsion of a partner in case of fraud and breach of duty.
- The arbitration clause of settlement of disputes among the partners.
- Arrangement in case of partner becomes insolvent.