Amendment in Partnership Deed :
Introduction
A partnership deed is a legal agreement when two or more than two people come together to run an enterprise. This document mentions all the essential terms and conditions related to the business, such as profit/loss sharing, obligations, admission of new partner/s, decided rules, salaries, exit process, etc.
What are the possible reasons to make change in partnership deed?
There are various possible reasons to make change in partnership deed:
- Change in business activity:
This may contain any addition, modification, amendment or deletion of the business activities that has been carried on by the partnership firm. Change in business activities shall require the change in partnership deed.
- Change in name and place of business:
The partners can together with the consent of all the partners mutually decide to change or modify the name of partnership firm and also the place of business as and when required.
- Change of Capital contribution:
Capital is the sole purpose of doing a business and is the backbone of the business. Any change in the capital of the firm shall require the amends and change in the partnership deed.
- Change in Management structure:
The management of the firm to handle the firm and the persons responsible for certain work or particular department is generally fixed. So, any change in it shall require the change in partnership deed.
- Change in terms or conditions:
Such changes shall require the change in the partnership deed. It can also include a change in the like manner as given below:-
- Addition of new Partner,
- Appointment of new Partner,
- Expulsion of a Partner,
- Retirement of any Partner, and
- Resignation of any Partner.
Modification of rights and responsibilities:
Any modification or alteration in the change of the rights and responsibilities of the partner shall invite the change in partnership deed.
- Change in profit or loss sharing ratio:
Profit and loss sharing ratio is the main concern of the partners and it totally depends on their mutual consent. They can change the profit and loss ratio according to the situation of the firm and so it can be processed by change in partnership deed.
- Change of duration of partnership:
When the duration of the partnership is specifically decided since the incorporation of the partnership firm then any change in the duration must be mutually decided and the same shall bring the change the partnership deed.
Procedure of changes in partnership deed?
There are four steps to follow for change in partnership deed:
Take the mutual consent of the partners:
Without the consent of the partners, the changes are not possible in partnership deed. Before preparing the deed for change, the partners should first look after whether the other partners are ready for changes.
- Draft a new partnership deed according to the changes in the constitution of the partnership:
Based on the requirement for change, the partners need to either prepare the new partnership deed or hire a professional who can assist in the matter.
- Execution of supplementary partnership deed:
The execution of the deed will involve a number of formalities to be completed by the partners.
- Requirement of stamp duty
- Signature and notary
Filing with Registrar of firms (ROF)
Where the partnership firm is already registered with the Registrar of Firm (ROF) of the concerned state, the partners must file the supplementary deed along the applicable form with the ROF. Along with the application, copies of the following documents are required to be provided.
- Original partnership deed and supplementary agreement, if any executed earlier.
- Supplementary deed as executed by the partners.
- If it includes the change of partners, the identity proof and address of the partners.
- Where the place of business has been changed, the address proof of the new place is provided along with the rent agreement (if applicable) and NOC from the owner.
Conclusion:
A partnership deed acts as the spine of the partnership firm. It can be modified and altered at any time according to the business requirements or partners willingness. The most essential element to bring change in partnership deed is to obtain the consent of partners in form of their signature on the deed. if anybody needs requirement or query about this company suggestion is ready to help.. thankyou!
