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.
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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.
ADVERTISEMENTS:
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- The amount which can be withdrawn by each partner.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.