Conversion of proprietorship into partnership: deed format

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 June 2015 I want to convert a Proprietorship into a Partnership firm which means the business has to be transferred and I want to convert i.e. carry forward the same VAT Registration into Partnership. Please show me a specimen sample Partnership Deed for the same.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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20 July 2024 Converting a proprietorship into a partnership involves several steps, including drafting a partnership deed that outlines the terms and conditions under which the partnership will operate. Below is a sample format for a partnership deed that you can use as a reference. Remember, it's crucial to customize it according to your specific business needs and consult with a legal professional to ensure compliance with local laws and regulations.

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**PARTNERSHIP DEED**

This Deed of Partnership is made on [Date], between:

**[Name of Proprietor]**, S/o [Father's Name], residing at [Address], hereinafter referred to as the "First Partner" (which expression shall, unless repugnant to the context or meaning thereof, be deemed to include his heirs, executors, administrators, and assigns) of the ONE PART;

**[Name of Second Partner]**, S/o [Father's Name], residing at [Address], hereinafter referred to as the "Second Partner" (which expression shall, unless repugnant to the context or meaning thereof, be deemed to include his heirs, executors, administrators, and assigns) of the OTHER PART;

**WHEREAS**, the First Partner is the sole proprietor of the business carried on under the name and style of [Name of Business/Proprietorship], having its principal place of business at [Address of Business].

**AND WHEREAS**, the Partners desire to convert the said proprietorship business into a partnership firm and carry on the business under a partnership agreement.

**NOW THIS DEED WITNESSETH AS FOLLOWS:**

**1. Name and Address:**
The partnership shall be carried on under the name and style of [Name of Partnership Firm] (hereinafter referred to as the "Firm"). The principal place of business of the Firm shall be at [Address].

**2. Nature of Business:**
The business of the Firm shall be [Brief description of business activities, e.g., trading in [specify products/services], manufacturing, etc.].

**3. Commencement and Duration:**
The partnership shall commence on [Date] and shall continue until terminated by mutual agreement of the Partners or as provided by law.

**4. Capital Contribution:**
a) The initial capital of the Firm shall be contributed as follows:
- First Partner: Rs. [Amount]
- Second Partner: Rs. [Amount]

b) The Partners may contribute additional capital as may be required for the conduct of the business, subject to mutual agreement.

**5. Profit and Loss:**
a) The net profits of the Firm shall be divided between the Partners in the following manner: [Specify profit-sharing ratio, e.g., equally, as agreed, etc.].

b) The losses of the Firm shall be borne by the Partners in the same proportion as the profit-sharing ratio.

**6. Management and Operations:**
a) The management and conduct of the business of the Firm shall be carried on by all Partners jointly and in mutual consultation.

b) Major decisions concerning the business shall require the unanimous consent of all Partners.

**7. Bank Account:**
The Firm's bank account shall be opened in the name of the Firm at [Name of Bank], [Branch], and all funds of the Firm shall be deposited therein.

**8. Books of Accounts:**
The Partners shall maintain proper books of accounts in accordance with applicable laws and regulations and the accounting standards prescribed by law.

**9. VAT Registration:**
The existing VAT Registration No. [VAT Registration Number of Proprietorship] shall be transferred to the Firm. All necessary steps and filings shall be undertaken to effect this transfer in accordance with VAT laws.

**10. Arbitration:**
Any disputes or differences arising between the Partners shall be referred to arbitration in accordance with the Arbitration and Conciliation Act, 1996, or any statutory modification or re-enactment thereof.

**IN WITNESS WHEREOF**, the parties hereto have set their hands on the day and year first above written.

**[Signature of First Partner]**
**First Partner**

**[Signature of Second Partner]**
**Second Partner**

**Witnesses:**

1.
**Name:**
**Address:**

2.
**Name:**
**Address:**

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Please note:
- Customize the partnership deed according to your specific business details, including business activities, capital contributions, profit-sharing ratio, etc.
- Ensure compliance with local laws and regulations regarding partnerships and business registrations.
- It's highly recommended to have the partnership deed drafted or reviewed by a legal professional to ensure it meets all legal requirements and safeguards your interests.

This sample partnership deed provides a foundational template. Adapt it to suit your specific circumstances and seek professional advice for precise customization and compliance.

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