Registering a partnership firm is a crucial step in establishing a legally recognized business entity. While partnership firms can operate without registration, obtaining proper registration offers several benefits and legal protections.
When individuals join hands to form a partnership, they are referred to as partners individually. Collectively, they are known by the name under which the business is conducted, which is termed the firm. While a partnership is a legal relationship existing among the partners, the firm represents the tangible manifestation of this partnership. Hence, the partnership serves as an intangible bond that unites the partners, while the firm stands as the visible embodiment, binding them together.
| Types of Partnership | |
| Partnership at Will | Particular Partnership |
| A partnership at will is formed when there is no specific agreement among the partners regarding the duration or termination of the partnership. It continues until any partner decides to dissolve it. | A particular partnership is formed for a specific business venture or undertaking. It comes to an end upon the completion of the agreed task or objective for which it was established. |
| Types of Partners | |
| Active/Actual/Ostensible Partner | An active partner is involved in the day-to-day operations and management of the partnership. They represent the partnership in business transactions and are liable for the actions of the firm. |
| Sleeping or Dormant Partner | A sleeping or dormant partner is a passive partner who does not actively participate in the management of the partnership. However, they still share in the profits and losses and are liable for the obligations of the firm. |
| Nominal Partner | A nominal partner lends their name to the partnership without having any real interest in the business. They do not contribute capital or participate in the management but are liable for the firm’s obligations. |
| Partner in Profits Only | This type of partner is entitled to a share of the profits but not liable for the losses of the partnership. |
| Sub-Partner | A sub-partner is a partner who shares their profits with an outsider without having any rights or liabilities towards the partnership firm. |
| Incoming Partner | An incoming partner is one who joins an existing partnership with the consent of all the other partners. They assume both the rights and liabilities of the firm upon entry. |
| Outgoing Partner | An outgoing partner leaves the partnership, and their liability for the firm’s actions extends until a public notice regarding their retirement is given. |
| Partner by Holding Out | When an individual represents themselves or allows others to represent them as a partner, they are deemed as a partner by holding out. They become liable to third parties who have relied on such representation. |
Step 1: Submitting the Registration Application
To register a partnership firm, an application form must be filed with the Registrar of Firms in the respective state. The application should be accompanied by the prescribed fees and needs to be signed and verified by all partners or their authorized representatives. The application can be submitted through post or physically delivered to the Registrar and should include the following information:
Step 2: Selecting a Name for the Partnership Firm
The partnership firm can be given any name, subject to certain conditions:
Step 3: Certificate of Registration
If the Registrar finds the registration application and documents in order, the firm will be registered in the Register of Firms. Subsequently, a Registration Certificate will be issued. The Register of Firms contains up-to-date information on all registered firms and can be accessed by paying the prescribed fees.
The following documents need to be submitted to the Registrar for partnership firm registration:
Once the Registrar is satisfied with the submitted documents, the partnership firm will be registered, and a Certificate of Registration will be issued. The Register of Firms serves as a repository of current information on all registered firms and can be accessed by interested parties upon payment of the required fees.
