Dissolution of partnership
An year before on 3rd February, a deed of partnership was entered at Kanpur. The partnership firm was registered, PAN card was issued and also got the TAN number. The business has not been started yet but it is about to commence now. No bank account has been made as of now, no investments, no assets and the documents have not been used for any purpose. More details about it is are as follows:
- Between 2 partners
- Business located in Jaipur (Article 2 - Name and Purpose)
- Place of Business in Kanpur (Article 2 - Place of Business)
- PAN & TAN Card issued on Jaipur address
- Dissolution Clause - "The Partnership shall be dissolved at any time by unanimous resolution of the Partners passed at a meeting of the partners called for that purpose. The partnership may also be terminated by unanimous agreement in writing signed by all of the partners. On dissolution of the partnership........Reserved Cash, Liquid Cash, advances shall be divided equally...."
1.) One partner is leaving and another is joining in. How to go about it legally?
2.) Also, I would like to change the business description (To something which will let me allow provide internet-only services because I may be having multiple websites for different services provided by my firm). Services may include informational, blogging or social media website etc.
I am looking for simple sequential steps needed from my side to perform these tasks, Thanks in advance.:-)
Asked 3 years ago in Business Law from Kanpur, Uttar Pradesh
1)you should first add one partner with consent of other partner . there must be clause in partnership deed to that effect .
2) generally following clause is incorporated in partnership deed That if the partners deem proper and in their interest, they may admit any other person or persons as partners on the terms and conditions as may be mutually agreed amongst themselves.
3) That the partner wishing to withdraw from partnership firm may do so by giving to the other partners one month’s notice in writing and on expiration of such notice period, the partner shall stand retired without dissolving the firm which shall continue to function with the remaining partners.
4) For change of constitution of forms & addition or retirement of partner. intimation has to be given to regsitrar of firm in form no V
1. This is called reconstitution and you can do so by way taking resignation letter from the retiring partner. When he retires/quits his dues will have to be cleared and a public notice will have to be given.
2. By way of amendment in the deed of partnership the name. nature of business can be changed. If your original partnership deed is registered then amendment will also have to be made by registered document.
1. There has already been a partnership dissolution clause,
2. Call for a meeting of the partners and record the resolution passed regarding retirement/resignation of one partner and appointment of another partner,
3. Accordingly fill up the requisite form before ROC for termination and appointment of partners,
4. File anothetr application for adding fresh areas of business.
when only two partners are there and one retires the firm dissolves naturally . so if you want to continue with the same firm under name and style of the same, continue after entering the new partner and with a new draft of deed and the same submitted before the registrar as per the procedure..
while when a registered firm is dissolved, any person who was a partner immediately before the dissolution or the agent of any such partner or person specially authorized on his behalf, may give notice of such a change to the Registrar, specifying the date thereof.
1. the leaving partner can submit his retirement letter with a notice of one or two months in advance as per the clauses of the partnership deed .The other members once it is accepted, You may decide on the existing profit and loss and make his payment of his share of profit if any or make him to pay if loss any. It simply means that the retiring partner has to submit a notice of retirement and other partners has to settle him with his shares of profit and the investment of his share
admitting new partner can be done by adding the new person in the firm and you should specify the terms and conditions of doing so which may initially be the agreement of all partners to acknowledge that a new partner is welcome. You may then suggest the amount of capital that the new partner needs to invest into the business and the rights and benefits that they will receive from doing so. “A new partner will be admitted with the agreement of all partners. The amount of capital to be invested by the new partner will be decided at the time of admission as too will the rights and benefits”(biz help 24)
Legally the name of the new entrant should be added and you need to reconstitute anew partnership deed and the same has to be submitted to the ROF.
Under Section 59 of the partner ship act , when the Registrar of Firms is satisfied that the provisions of section 58 have been duly complied with, he shall record an entry of the statement in the Register of Firms and issue a Certificate of Registration.
and when the instances of the following occurs
1.The Place of business may change
2. The Partners may decide to change the name of the Firm
3. There may be admission of new partners in the Firm
4.The old partners may resign or leave from the Firm
5. There may be change in the name and permanent address of the partners
6. The minor Partner entered at time of constitution of firm may get the majority etc, the Partners are bound to inform the Registrar of Firms about such changes in the Partnership Firm. Consequent to which they are to draft a new Partnership Deed as per the changes and to file again the application along with required documents to the Registrar of Firms with the applicable fees.
the simple steps can be
1. settle the retiring partner as per the clause you mentioned in the existing deed.
2. yo may inform the same to the registrar by a notification of the retiring partner and dissolution of the firm in (form No.Vi)
2. draft anew partnership deed admitting the new partner include the business purpose(clauses as you have mentioned in the query), form No. V, terms and conditions as you want and submit it as per the procedure and fee applicable
the firm is constituted with two partners only so no majority vote is needed, partner can leave by giving notice. whenever there is entry a new partner into firm then firm need to be reconstituted and new rules can be made easily by partners of firm; section 63 of partnership act. then renewal of registration is required under section 59 of partnership act. When the Registrar is satisfied that the provisions of section 58 have been duly complied with, he shall record an entry of the statement in a register called the Register of Firms.
A notice is require to send under section 63 to the registrar within 90 days from the date of any change in formation of partnership firm.
section 62 :- When a change occurs in the constitution of a registered firm, every incoming, continuing or outgoing partner, and when a registered firm is dissolved, every person who was a partner immediately before the dissolution, or the agent of every such partner or person specially authorised in this behalf shall, within a period of 90 days from the date of such change or dissolution.