Registration of Firm under the Indian Partnership Act
What is a partnership firm?
A partnership firm is a business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Deed that may or may not be registered. In such a business, the members are individually partners and share the liabilities as well as profits of the firm in a predetermined ratio.
Advantages of Registration:
The registration of a firm is not only advantageous for the firm but also for those who deal with it.
The following advantages are derived from the registration of a firm:
(i) Advantages to the Firm:
The firm gets a right to the third parties in civil suits for getting its rights enforced. In the absence of registration, the firm cannot sue outside partners in courts.
(ii) Advantages to Creditors:
A creditor can use any partner for recovering his money due from the firm. All partners whose names are given in the registration are personally responsible to the outsiders. So, creditors can recover their money from any partner of the firm.
(iii) Advantages to Partners:
The partners can approach a court of law against each other in case of dispute among partners. The partners can sue outside parties also for recovering their amounts, etc.
(iv) Advantages to Incoming Partners:
A new partner can fight for his rights in the firm if the firm is registered. If the firm is not registered then he will have to depend upon the honesty of other partners.
(v) Advantages of Outgoing Partners:
The registration of a firm benefits the outgoing partners in a number of ways.
The outgoing partners may be divided into two categories:
(i) On the death of a partner,
(ii) On the retirement of a partner.
On the death of a partner his successors are not responsible for the liabilities incurred by the firm after the date of his death. In case of a retiring partner, he continues to be responsible up to the time he does not give public notice. The public notice is not registered with the Registrar and he ceases his liabilities from the date of this notice. So, it is essential to get a firm registered for getting this advantage.