Partnership Registration in Pakistan
- Profit and losses,
- The distribution of ownership,
Let's discuss partnership under the light of the Partnership Act, 1932;
Partnership as per Partnership Act 1932
"Partnership" is the relationship between the persons who have agreed to share the profits and losses of a business executed by all or any of them acting for all.
'The relation of partnership arises from contract and not from status.'There are different types of partnership i.e. as per Tenure, Objectives, Nature and Legality which are enlisted below;
Obtaining NTN for Manufacturing Industry
According to Duration/Objective
Partnership at Will
Such partnership stays on the partners' will, which means that it comes to an end when any one of the partners inform about his intent to do so.
A particular partnership is established to accomplish a specific venture. It can be brought to an end spontaneously with the accomplishment of that venture.
According to Tenure
Partnership for Fixed Term
This partnership is for a specific time span, i.e. three years, six years, or any other time duration. This partnership goes to an end spontaneously when the decided time expires.
Those Partnerships which are made neither for a fixed time span nor for any specific venture are called flexible partnerships.
According to Nature
When there is no agreement between the partners then the provisions of the Partnership Act 1932 will be applicable for general partnerships by which every partner is with unlimited liability.
In this type of partnership, all or some excluding one partner have their liability limited to the extent of capital introduced by them.
According to Liability
In a general partnership, every partner is with unlimited liability.
In a limited partnership, the liability of at least one partner is unlimited, whereas the other partners may have limited liability.
Limited Liability Partnership (LLP)
LLP is a kind of partnership where some or all partners are with limited liabilities.
Now we will briefly discuss the process of registration of Partnership in Pakistan. Detail of which is as follows
Registration of Partnership Firm
- Selection of name for Partnership Firm Registration
- Drafting of Partnership Deed
- Documents required to be completed
- Fee for Firm Registration
- Submission of Documents for Firm Registration
- Commencement of Partnership Firm Business
1- Selection of Name for Partnership Firm’s Registration
- The Co etc.
2- Drafting the Partnership Deed
Approval of Company Name
Purpose of partnership deed
Characteristics and Contents of a Partnership deed
- The name of the Firm.
- Name and addresses of the partners.
- Profit and loss sharing ratio
- Nature of the business.
- Remuneration of partners.
- The interest which is allowed on capital and charged on drawings.
- Right of partners
- The drawings which each partner is allowed to make
- The duration or term of the partnership.
- Duties of partners.
- The amount of the capital to be introduced by each partner.
- The method used for calculating goodwill.
- Name of Firm as decided by all partners.
- The date of commencement of business.
- Methodology for calculation of goodwill.
- The procedure that should be followed in cases of dispute arising between the partners.
- The procedure of retirement or admission of a partner.
- Amount of capital introduced by each partner.
- Name and the details of all the partners of the Firm.
- Firm's existence duration.
- The Profit-sharing ratio between the partners.
- The salary and commission, if applicable, payable to partners.
- Procedure for cases where a partner would become insolvent.
- Obligations, duties, responsibilities and power of every partner of the Firm.
- Procedure for the settlement of accounts at the time of dissolution of Firm.
An Overview of the drafting of the deed
The nature of business should be described clearly.
The profit and loss ratio should be mentioned.
Should be as per Partnership Act,1932.
On 1000rs Stamp paper.
The deed should be printed.
3- Documents required to be completed
- Each partner's full Name, Father or Husband's Name, Residential Address, and copy of the National Identity Cards of each partner.
- Partnership deed on stamp paper of Rs. one thousand. A Partnership Deed is the documentary details of the Partner's rights and obligations participating in this business.
- Evidence for the address of business location, normally bills for utilities
- If the location of business has already taken on, then the rent deed/document of ownership is mandatory.
- Original Deposit Slip of Partnership Deed/Agreement Fee paid in national bank of Pakistan.
- Signatures of all the partners on Partnership Deed/Agreement along with 'two witnesses'
4- Fee for Registration of Firm
5- Submission of Documents for Firm Registration
6- Commencement of business of a Partnership Firm
Dissolution of a partnership firm
Ways of dissolving a Partnership firm
When the partners mutually agree
It is the simplest approach to dissolve a partnership firm. Partners may communicate mutual consent or may agree to dissolve the Firm.
A firm shall be required to dissolve by force if all partners or all partners excluding one partner are declared as insolvent and if the Firm is engaged in illegal activities like drug dealing or doing business with other countries or distant countries that shall cause harm to the interest of Pakistan or doing other these types of activities.
Dissolution by notice
When the partnership business is at will, then any partner has a right to dissolve the partnership by just giving a notice in advance. Notice will consist a date by which dissolution will be in effect.
Dissolution by Court
In case of metal un-stability or misbehavior by any partner with the other partners or if any partner breaches the clauses of the partnership deed, then other partner(s) can file a case in the court for dissolution of the Firm. However, a firm can be dissolved by the court only if the said firm is registered with the Registrar of Firms which means that court cannot dissolve an unregistered firm.
Difference between Partnership & Company
|Prevailing Law||The partnership is prevailed by Partnership Act, 1932' and various Rules made thereunder.||Companies are prevailed by 'Companies Act, 2017.'|
|Name of Entity||Any name as per option||Name to consist of 'Private Limited' in case of Private Company as a suffix.|
|Distinct entity||Not a separate legal entity||It is a separate legal entity under the Companies Act, 2017|
|Perpetual Succession||It has no perpetual succession as this is based on the partners’ will.||It has perpetual succession, and members may enter or exit.|
|Common Seal||There is no concept of a common seal in case of Partnership.||It shows the signature of the company, and every company shall have its common seal.|
|Ownership of Assets||Partners are owners of Assets as per their profit-sharing ratio.||The company, independent of the members, has ownership of assets.|
|Legal Proceedings||Only registered partnerships can sue the third party||A company is a legal entity that can sue and be sued.|