Last updated: July 17th, 2023 9:04 AM

Is it compulsory to register a partner?

Registration of a partner to a partnership firm is not mandatory in India. However, if a new partner joins the partnership, the partnership deed should be amended, and a supplementary agreement should be executed. While registration of partners is not required, the partnership firm must be registered with the Registrar of Firms under the Indian Partnership Act, 1932, to avail various legal and financial benefits and comply with the laws and regulations.

Partnership firm

Partnership firms are formed by agreements between two or more people who agree to carry on a business and split profits and losses. A partnership deed outlines the terms and conditions of the partnership, including the partners' rights and responsibilities, the profit-sharing ratio, and the duration of the partnership. A partnership firm is considered registered once it is registered with the Registrar of Firms. The registration process involves the submission of the partnership deed and other relevant documents to the Registrar of Firms.

Is it compulsory to register a partner?

In India, registration of a partner to a partnership firm is not mandatory. However, if a new partner joins, the deed should be amended to include the new partner.

Register a partner with a partnership firm

Registering a new partner in a partnership firm involves the following steps:

• Amendment to Partnership Deed: The partnership deed must be amended to include the new partner. The amendment should consist of the terms and conditions of the new partner's entry, such as capital contribution, profit-sharing ratio, and liabilities.
• Execution of Supplementary Agreement: A supplementary agreement should be executed between existing and new partners. This agreement should contain the terms and conditions of the new partner's entry into the partnership.
• Stamp Duty and Registration: The supplementary agreement must be stamped and registered with the Registrar of Firms. The stamp duty and registration fees vary from state to state.
• Obtain PAN and TAN: Partnership firms must obtain Permanent Account Numbers (PANs) and Tax Deduction and Collection Account Numbers (TANs) from the Income Tax Department.
• Update Bank Account and Other Documents: The partnership firm must update its bank account, licenses, and other documents with the new partner's details.
• Publish Notice in Newspaper: Publish a notice in a local newspaper and the Official Gazette about adding new partners to the partnership firm. This notice should contain the name and address of the partnership firm, the names and addresses of the existing and new partners, and the effective date of the addition of the new partners.

In conclusion, partnership firm registration is not mandatory in India. However, if a new partner joins the partnership, the partnership deed should be amended, and a supplementary agreement should be executed. The deal needs to be stamped and registered with the Registrar of Firms. The partnership firm must also update its bank account, licenses, and other documents with the new partner's details. Refer to our article to know more about the Addition and Removal of Partners