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September 28, 2020

Partnership Registration Know benefits & Consequences of Non Registration

by Rubina Dsouza in Compliance Law, Corporate Law

Partnership Registration Know benefits & Consequences of Non Registration


Partnership is an agreement between two or more parties to carry on business on mutually agreed terms and share its profits and losses. The partnership can be oral or written. An written partnership agreement is called a Partnership Deed.  

It is not mandatory to register a Partnership Deed. However, it is always advisable  to register the same. The partnership is governed by the Partnership Registration Act, 1932.  In accordance to the act the partners can register its Firm with the Registrar of Firms in which the firms main office is located.

In this article we will understand some of the Features of Partnership Deed,  and the Consequences of registration and Non- Registration of a Partnership.

Feature of a Partnership:

  1. It is between two or more persons
  2. An mutual agreement on mutually agreed terms and conditions
  3. Involves sharing of profits and losses
  4. The liability of Partners is unlimited
  5. The partnership does not enjoys a separate legal status
  6. Involves Capital contribution of partners
  7. It has an Agency Relationship
  8. Is a Lawful form of Business
  9. The partners enjoy Ownership and Control in the business
  10. Transfer on Interest
  11. The partners share Mutual trust and confidence
  12. Partners can decide the Duration of Partnership

Partnership Registration Pros and Cons:

Although Registration of Partnership is not mandatory it is always advisable. Let us understand the benefit of registration and  consequences non-registration of Partnership:

Benefits of Registration of a Partnership:

  1. Partnership registration enables partners the right to sue
  2. If a partnership is registered the partners can enforce its claims against a third party in case of discrepancies
  3. Further, If the partners have discrepancies against each other  the same can be resolved in the court of law
  4. A registered partnership firm enjoys better credibility in the market
  5. A registered Partnership firm will have better business opportunities  due to reliability and will have eventually enjoy a better Goodwill.

Consequences of Non- Registration of partnership:

  1. A non- registration Partnership cannot file an legal suit against any partners in case of discrepancies and disputes among its partners.
  2. The firm cannot take nay action in the court of law against any other parties for settlement of its claims.
  3. Further, a suit cannot be filed by the partners to enforce their rights against the partnership firm.
  4. A non-registered partnership cannot enforce claims against the third party in the court of law.
  5. A non- registered partnership firm has less credibility and reliability and therefore does not enjoys business opportunities and goodwill in comparison to a registered partnership firm.
  6. It cannot claim any adjustments for any amount exceeding Rs. 100/-

However, the following rights are not effected by non- registration of a partnership firm:

  1. The right to sue third party where there occurs any infringement of patent rights.
  2. The official assignee or receiver will still have the power to realize the property of an insolvent partner.
  3. A suit in which the claim does not exceed Rs 100/-
  4. The partners of an unregistered firm still has the rights to sue for dissolution of firm or for settlement of accounts of a dissolved firm or right to realize the property of a dissolved firm.

Procedure of registration of Partnership Firm:

The process on Registration of a Partnership Firm is now made online. Form A application for registration is to be filled and physical copies of Documents are to be submitted within 30 days from the date of application with the Registrar of Firms. The Partnership Deed and Application should contain the following basic information:

  1. The name of the firm
  2. The name  and address of the Partners
  3. Date of commencement of partnership
  4. The nature of business to be carried
  5. The principal place of business from where the partnership business shall operate, if any other additional place of business exist the same shall also be made available.
  6. Date of joining of partners
  7. Duration of the partnership
  8. Profit and loss sharing ratios
  9. Capital contribution
  10. Dissolution and winding up clauses
  11. Any other mutually agreed terms and conditions

After the online registration the documents are to be submitted with the registrar of firms where the partnership is situated along with the required fee receipt paid online and other relevant documents. The Registrar of firms will acknowledge the receipt and the process of registration shall be completed. In case of any discrepancies and objection for the same will be received on the registered email. To know the detail New online registration process kindly click on the link below:

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