What is Partnership ?
“Partnership” is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually, “partners” and collectively “a firm”, and the name under which their business is carried on is called the “firm-name”.
– Section 4 Partnership Act,1932
Partnership as the name suggests is a type of collaboration of two or more than two partners. These partners together set up a legal firm under one name. According to The Companies Act, 2013, there can be a maximum of twenty partners in a partnership. The partners have unlimited liability. Partnership is not considered to be a separate legal entity.
A drafted partnership deed contains – the goals, vision, strategies, details of the partners, the sharing of profit and losses and other important information like duties and working. It is a mandatory document if the firm seeks registration in a properly laid out format. Partnership registration is governed by The Partnership Act, 1932 and The Companies Act, 2013.
Other than individuals, companies can also enter in a partnership. Though, this partnership is governed by their Memorandum of Association.