Partnership Registration - Updated

8/13/2019 Partnership Registration - Updated

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Regulatory Procedures

Partnership Registration Process

PREPARED BY:

Legal Services CellSmall and Medium Enterprise Development Authority

Government of Pakistan

www.smeda.org.pk

01.02.2006

HEAD OFFICE 6thFloor, LDA Plaza, Egerton Road, Lahore

Tel: (042) 111-111-456, Fax (042) 6304926-7

[email protected] 1, 2006

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE PUNJAB SINDH NWFP BALOCHISTAN8thFloor, LDA Plaza, 5thFloor,Baharia Ground floor Banglow No.15-A

Egerton Road, Complex-II, M.T.Khan State Life Building Chaman Housing,Lahore. Karachi. The Mall,Peshawar. Scheme, Airport, Road,

Quetta.Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 2831623, 2831702Fax: (042) 6304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 2831922

[email protected] [email protected] [email protected] [email protected]


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Partnership Registration Procedure Legal Services Cell

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TABLE OF CONTENTS

1. Introduction of smeda 03

2. Role of legal services cell 03

3. Process Flow Chart 04

4. Partnership, what is? 05

5. Different types of partnerships 05

6. Registration of a partnership 05

7. Partnership deed 06

8. Procedure for registration 06

9. Advantages of registration 07


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1. Introduction of SMEDA

The Small and Medium Enterprise Development Authority (SMEDA) was established with theobjective to provide fresh impetus to the economy through the launch of an aggressive SME

development strategy.

Since its inception in October 1998, SMEDA had adopted a sectoral SME developmentapproach. A few priority sectors were selected on the criterion of SME presence. In depth

research was conducted and comprehensive development plans were formulated afteridentification of impediments and retardants. The all-encompassing sectoral development

strategy involved overhauling of the regulatory environment by taking into consideration otherimportant aspects including finance, marketing, technology and human resource development.

SMEDA has so far successfully formulated strategies for sectors, including fruits and vegetables,

marble and granite, gems and jewellery, marine fisheries, leather and footwear, textiles, surgicalinstruments, transport and dairy. Whereas the task of SME development at a broader scale still

requires more coverage and enhanced reach in terms of SMEDAs areas of operation.

Along with the sectoral focus a broad spectrum of services are now being offered to the SMEs bySMEDA, which are driven by factors like enhanced interaction amongst the stakeholders, need

based sectoral research, over the counter support systems, exclusive business developmentfacilities, training and development for SMEs and information dissemination through wide range

of publications.

2. ROLE OF LEGAL SERVICES CELL

The Legal Services Cell [LSC] is a part of Business and Sectors Development Services Divisionof SMEDA and plays a key role in providing an overall facilitation and support to SMEs. TheLSC provides guidance based on field realities pertaining to SMEs in Pakistan and other parts of

the world.

LSC believes that information dissemination among the SMEs on the existing regulatoryenvironment is of paramount importance and it can play a pivotal role in their sustainable

development.

In order to facilitate SMEs at the Micro Level LSC has developed user-friendly systems, whichprovide them detail description of the Laws, and Regulations including the process and steps

required for compliance. The purpose of this document is to provide SMEs with informationpertaining to registration of a Partnership firm. SMEs interested in enhancing their understanding

about the procedures can also use the document and documentation required to comply withregistration procedure. For convenience of the readers a process flow chart and sample of various

forms are also included.


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3. PROCESS FLOW CHART FOR REGISTRATION OF PARTNERSHIP

Purchase a stamp paperworth Rs. 500/-(available at the District Courts and HighCourt). Fill it in with the details of the

agreement)

Sign the Partnership Agreement

Duly fill in Form-I i.e. application for registration

Attach following documents with Form-1:

Photo Copy of partnership deed / Agreement Original Copy of Challan No.32-A evidencing deposit of

Rs. 100/-

Copy of identity cards of partners Copy of identity cards of witnesses

I.D. Cards and copy of the partnership agreement must be attested

by the notary public (seated in District and High Court premises)

Upon satisfaction as to all the information given,the registrar shall register the firm and shall issue a

Certificate of Re istration in FORM-C.

Submit duly completed Form-1

along with documents to the

Registrar of Firms.

Registrar will check for the correctness,completeness and originality of papers, he will

also verify the name and other particulars

mentioned in the Form-1 and or the Partnershipdeed.

Fill out the Challan form No.32-A in triplicate and

submit in National Bank for deposit of Rs. 100/-

Purchase1. Bank Challan

Form No. 32-A,

2. Form-1againstpayment of Rs. 10/-

(forms available atRegistrar Office

Hire a Lawyer(Optional)


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4. PARTNERSHIP, WHAT IS?A partnership is a relation between two or more persons who have agreed to share the profits of abusiness carried out by all or any of them acting for them on the basis of certain terms and

conditions.

Persons who have entered into partnership with one another are called individually partnersand collectively a firm and the name under which their business is carried on is called the

firm name.

A partnership is regulated under the provision of the Partnership Act, 1932.

5. DIFFERENT TYPES OF PARTNERSHIPSThe Partnership Act, 1932 provides following types of partnerships:

1) Partnership at-will

2) Particular Partnership

1) Partnership at Will:In this kind of partnership no provision is made by contract

between the partners for the time period for which their partnership will continueor for the termination of the partnership. It is a partnership for indefinite period.

The partnership may be dissolved at any point as long as a partner gives notice toall the other partners.

2) Particular Partnership:Where the partners agree to form a partnership to do aparticular business or undertaking, such partnership shall be a particular

partnership. This partnership shall stand dissolved on the completion of suchbusiness and undertaking.

6. REGISTRATION OF A PARTNERSHIP

The registration of partnerships is not compulsory by law. It is optional and there is no penaltyfor non-registration. However there are disadvantages for not registering. For example, if any

dispute arises among the partners or ex-partners, no suit in any court of law can be filed by suchpartners or ex-partners against the un-registered firm or against themselves to enforce any right

arising from any contract or conferred by the Partnership Act, 1932. Similarly, an unregisteredfirm cannot institute a suit against a third party to enforce any right arising from a contract, e.g.

for the recovery of the price of goods supplied. It must be noted however, that a third party mayfile suit against an unregistered partnership. Even in this case, the partnership can not mention

any monies that may be outstanding to them in court.There is no protection to the partners liability either in an un-registered partnership. As there is

no formal documentation stated that they are in partnership, if one decides to deny the existenceof the partnership, there is not much that can be done about it legally. It is important to note that


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Registering a partnership during the perndency of any suit in a court of law can not subsequentlycure this effect. Prior registration is therefore necessary.

7. PARTNERSHIP DEED

The mutual rights and obligations of all partners must be documented in the shape of a

partnership deed(Annex. C). This needs to be signed by all the partners and subsequent copiesheld by each partner. At the time of registration, a copy of the deed has to be submitted with anapplication to the Registrar of Firms in the concerned area. This document may also be referred

to as an Article of partnership. A partnership deed usually contains the following format: -

1. The name of the firm.2. The nature of business that is to be carried out by the firm.

3. The address at which the firm intends to conduct its business.4. The amount of capital that each partner contributes. The form of capital whether that be

cash or property needs to be documented. If the capital is property, a full description ofthe property and the valued amount should be given also, (optional, mention it or not).

5. The names and addresses of each partner should be given.6. The duration of the partnership if any.

7. The ratio of sharing profits and losses.8. The amount or percentage of interest, if any , which is to be allowed on capital.

9. The manner in which a partnership is to be dissolved and the subsequent distribution ofproperty among the partners including the goodwill.

10. In the case of insolvency the valuation and treatment of goodwill.11. Provisions regarding the accounting system and the fiscal year to be used.

12. Rules to be followed in the case of retirement, death and admission of a new partner.13. The method of settling disputes if any among partners. i.e. whether or not an arbitrator is

to be appointed.14. Method of calculating amount issued to a deceased partner, and whether this is to be paid

in full or in installments to his legal representative.15. In the case of breach of duty by one partner, powers of other partners to expel him from

the firm.16. The keeping of proper books of accounts and periodical preparation of accounts.

17. Any provision to prevent any future misunderstanding and ill will.

Note: A printed partnership deed can also be obtained in the form of judicial papers that cover allthe points mentioned above. This in turn can be signed and submitted to the registrar as

mentioned.

8. PROCEDURE FOR REGISTRATION

The procedure of registration of a partnership is comparatively simple. Form-I (Annex-A) inPunjab while Form-A in Balochistan, NWFP and Sind provinces under Partnership Act 1932,

has to be submitted to the Registrar of Firms (see flow chart). All the partners must sign theapplication. Form-I / A must be attested and supported by the following documents:

1. Attested photocopy of partnership deed.


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2. Original copy of Challan No. 323. Attested copies of identity cards of partners

4. Attested Copies of identity cards of witnesses.

The Registrar of the Firms shall after receiving the application for the registration shall verify all

the information given in the Form-I / A and its supported documents. After checking thecorrectness, the Registrar shall register the firm and issue theForm-C, it is the certificate ofregistration issued to the firm.

If at any time there are changes to the firm in relations to the partners, place of business,

constitution of the firm, insolvency etc. the registrar must be notified as per Rules prescribedunder Partnership Act,1932.

9. ADVANTAGES OF REGISTRATION

Following are some advantages of registration of the partnership.

1) The registered firm can file suit against the third party for the enforcement of rightsarising from a contract.

2) The registered firm attracts large capital resources from the public.3) Where there is dispute among the partners or between the partner and the firm or between

partners and ex-partners, the partners of a registered firm can file suit in the court of law.4) The registered firm can claim any outstanding balances from a third party through a court

of law.5) In case of registered firm, any new partners have the security of liability and may resort

to the court of law in case of a dispute.6) In the case of partners leaving the firm, they can not be made liable for any debts incurred

after leaving. This is only seen in the case of a registered firm.


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ANNEXURE A

SAMPLE FORMS


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Documents

Partnership Registration - Updated