One of the most significant types of company organisation is a partnership. In a partnership firm, two or more individuals collaborate to launch a business and fairly split profits. A partnership can be used for any kind of company, profession, or trade. Read on to know more.
In India, partnership companies are governed and regulated under the Indian Partnership Act, of 1932. Partners are the people who join forces to form a partnership company. A partnership agreement between the partners creates the company. The agreement between the partners, known as a partnership deed, governs their interactions with one another as well as with the partnership company. In contractual and legal relationships arising from and during a partnership company’s operation, the Act establishes the role of a partner as well as a general partnership vis-à-vis third parties. This article takes a detailed look at the numerous facets of managing a civil partnership in India.
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Name Rules in India
Partnership company are not separate legal entities, even though the partners are. Being a creditor, debtor, or property owner is not permitted for a partnership firm registration. A partnership registration company’s assets, obligations, and credit are owned by the partners, according to the law. The general partnership agreement must expressly define how earnings and losses will be allocated among the partners to avoid future misunderstandings. Each partner is permitted to act as the other’s agent when conducting business.
There are certain rules and regulations to which a partnership deed is required to adhere to select a name for its corporation. These rules are laid down below:
- The name of the company must be one of the names of the proprietor(s) or accomplices or an already-used name
- The names of the members as they appear in the Register of Members may be included in a Partnership company name list
- The provisions of both the emblems and names (Prevention of Improper Use) Act or any amendment or re-authorisation thereof should not be violated by the name of a partnership company
- The words “and Co.,” “and Company,” or “and Associates” may be added as a suffix to the Partnership company name. Any postfixes, however, that the Council would consider undesirable, will not be accepted
- If the complete first names, full middle names, and maybe full surnames of the partners are used, a name for a partnership company may also be accepted without the postfixes “and Co.,” “and Company,” or “and Associates.” Additionally, in these situations, “and” or “and” is required to be used either amid the accomplices’ full first names, full centre names, or maybe entire surnames, or before their final full first name, full centre name, or full surname
- A name that is unrelated to the member’s name as stated above will not be accepted
- Names like Fire, Leader, Supreme, smash, Mastermind, Champion, Super, etc. for partnership company are not allowed
- The part’s name, middle name, and surname will change to match the names, middle names, and surnames that appear in the list of people
- The company name that has already been used by a partner or individual may be concompanyed if the company status changes from singular to organisational, or vice versa, provided that neither partner nor individual objects
- For three years following the company dissolution, any party or individual should not utilise a partnership company name that was being used by the owner or partners. Up to three long periods after the company closure, the name may be transferred to a related group or persons. The stated exchange/company may be open to any individual who is eligible for a share of such name under the regulations if the name of a honing part is expelled after three years have passed
- Except for the Council’s prior approval by Regulation 170, any reconfiguration of the company under a similar company name shall be without effect.
How does Partnership Registration Work?
Partnership registration is the process through which a partnership company is registered with the Registrar of company by its partners. The business should be registered by the partners with the state’s registrar of the company. Since registering a company is not required, the partners may do so at the moment the company is formed or at any point in the future while it is still in operation.
Two or more individuals must join forces as partners, decide on a business name, and sign a partnership deed to register a partnership. However, partners are not permitted to be spouses or members of Hindu Undivided Families.
Name of the Partnership Company
Any name may be used for a partnership company as long as the following requirements are met:
- The name shouldn’t contain words like an empire, crown, emperor, empress, or any other phrases that suggest government endorsement or support
- It also shouldn’t be too similar to or identical to the name of an existing company operating in the same industry.
What Drawbacks Would an Unregistered Partnership company Possess?
The partners of the above-mentioned company may pursue their rights under the rules of the Indian Partnership Act, of 1932, even if the partnership company is not registered. This means that in the event of any disagreement with a third party, the concerned company is not allowed to sue or assert a set-off claim. However, third parties may file lawsuits against the unregistered partnership company.
Conclusion
Compared to a business or an LLP, It is subject to far fewer compliance requirements. A Digital Signature Certificate (DSC) or Director Identification Number (DIN), which are necessary for the designated partners or company director of an LLP, are not required of the partners. As there is no distinction between ownership and management, decision-making in a partnership company is swift. Equally divided amongst the partners are the company’s gains and losses. They even have the freedom to choose how much money the partnership company makes and loses.
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Read more,
- What Are the Key Features of a Partnership Deed?
- Pan Card for Partnership company
- Different Types of Partnership company
