DEED OF PARTNERSHIP
1. Parties and Formation
This Deed of Partnership ("Deed") is made as of __________________ between __________________, residing at __________________, and __________________, residing at __________________ (together the "Partners"), who have agreed to carry on business in partnership under the name and style of "__________________" (the "Firm"), governed by the Indian Partnership Act, 1932.
2. Name, Place of Business, and Nature of Business
The name of the Firm shall be "__________________" and its principal place of business shall be at __________________, or such other place as the Partners may mutually decide. The Firm shall carry on the business of __________________, and such other allied or ancillary business as the Partners may agree from time to time.
3. Duration
The partnership shall commence on __________________ and shall be a partnership at will, unless the Partners agree to a fixed term, and may be dissolved in accordance with the provisions of this Deed and the Indian Partnership Act, 1932.
4. Capital Contribution
The initial capital of the Firm shall be contributed by the Partners as follows: __________________ shall contribute __________________, and __________________ shall contribute __________________. Further capital, if required, shall be contributed by the Partners in the same proportion, unless otherwise mutually agreed and recorded in writing.
5. Profit and Loss Sharing
The net profits and losses of the Firm, after payment of interest on capital, remuneration to working partners (if any), and other permissible deductions, shall be shared between the Partners as follows: __________________ — __________________, and __________________ — __________________.
6. Interest on Capital and Drawings
The Firm shall pay interest on the capital contributed by each Partner at the rate of __________________ per annum, subject to the limits prescribed under the Income Tax Act, 1961 for deductibility. Partners may draw amounts against their share of anticipated profits as mutually agreed, subject to the Firm's cash flow position.
7. Bank Account and Books of Account
The Firm shall maintain a bank account in its name, to be operated jointly or severally by the Partners as they may authorise from time to time. Proper books of account shall be maintained at the principal place of business, reflecting all receipts, payments, assets, and liabilities of the Firm, and shall be open for inspection by any Partner at all reasonable times.
8. Duties of Partners
Each Partner shall devote such time and attention to the business of the Firm as may be mutually agreed, act honestly and in good faith towards the Firm and the other Partners, and not engage in any competing business without the consent of the other Partners.
9. Admission of a New Partner
No new partner shall be admitted to the Firm except with the written consent of all existing Partners, and the terms of admission, including capital contribution and profit-sharing ratio, shall be recorded in a supplementary deed executed by all Partners, including the incoming partner.
10. Retirement of a Partner
A Partner may retire from the Firm by giving not less than a period of written notice to be mutually agreed to the other Partners. On retirement, the retiring Partner's capital account and share of accumulated profits/goodwill, if any, shall be settled in accordance with a valuation mutually agreed or determined by the Firm's chartered accountant, and a supplementary deed shall be executed to record the continuation of the Firm with the remaining Partners.
11. Death or Insolvency of a Partner
In the event of the death or insolvency of a Partner, the partnership shall not automatically dissolve if the remaining Partners agree in writing to continue the business, subject to settlement of the outgoing Partner's capital account and share of profits with their legal heirs or representatives.
12. Dissolution
The Firm may be dissolved by mutual consent of all Partners, or in accordance with the provisions of the Indian Partnership Act, 1932. Upon dissolution, the assets of the Firm shall be applied first towards discharging its liabilities, and the surplus, if any, distributed among the Partners in proportion to their capital and profit-sharing ratio.
13. Dispute Resolution and Governing Law
This Deed shall be governed by the laws of India. Any dispute between the Partners arising out of or in connection with this Deed shall be referred to arbitration under the Arbitration and Conciliation Act, 1996, seated at __________________, __________________.
14. Miscellaneous
This Deed constitutes the entire agreement between the Partners regarding the Firm and supersedes all prior discussions. Any amendment to this Deed shall be made in writing and signed by all Partners. This Deed may be executed in counterparts.
Execution / registration notes
- Registration of the partnership firm with the Registrar of Firms is optional but strongly recommended — an unregistered firm cannot sue third parties to enforce a contractual right.
- This deed should be executed on stamp paper of the value prescribed under the Stamp Act of the state where the Firm is registered.
- Apply for a PAN in the name of the Firm and, if turnover thresholds are met, for GST registration.
- Have this deed reviewed by a chartered accountant for interest-on-capital and partner-remuneration limits under Section 40(b) of the Income Tax Act before finalising figures.
General-reference format provided by PNPC Global. Not legal advice. Laws and stamp-duty requirements vary by state and change over time — have this document vetted by a qualified professional before execution.