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Q. No. 5: How can partnership are registered? What are the advantages of registration? ANSWER:

INTRODUCTION: The name of the firm under which the business is carried on may be recorded with the registrar. Registration means, to get the firm/partnership be registered with the registrar. The registration is the evidence of the existence of the firm. MEANING OF REGISTRATION: Registration of firm means to get the firm be registered with the registrar. It is the proof of the existence of firm. It does not provide any legal entity to firm. OPTIONAL REGISTRATION: The registration of partnership is not compulsory by law. It is optional and there is not penalty for non-registration. In case of general partnership it is up-to the partners whether they want to get their firm registered or not. According to Sec 69 o Partnership Act: If the firm is not registered with the registrar (appointed under section 57 (1) of Partnership Act 1932 for the partners as well as for the firm. So it makes the registration of the firm necessary to get some benefits of registration. PROCEDURE OF REGISTRATION: These are as follows: Submission of Application

Verification of Application

Submission of Fee




Submission of Application: According to Section 58(1), an application for the registration on a prescribed form, submitted directly or by post to the registrar. This form will include following information. a. Name of Firm: The name of the firm with which business carried on. b. Place of Business: The place where business will be started is mentioned on application. c. Name of Partners: Name of all the partners and the permanent addresses and other necessary information Prepared By: H. HAFIZ ABDUL REHMAN 0321-6485593


d. Date of Joining: The partners date of joining the firm. e. Nature of Business The nature of business should also provide information about the nature of business. f. Other Places The name and addresses of the other places where, the firm may conduct business. g. Duration: The period for which, firm wants to continue its business. ii. Verification of Application: The application for the registration of the firm must be signed by all the partners or by authorized agents. iii. Submission of Form and Fee: Fee and form will be submitted to the registrar office with the copies of challan form. iv. Certification: The registrar examines the application and if the registrar is satisfied with the application then he will register the firm and enters its name in the register. It is called register of firm, The registrar will issue a certificate, which is the proof of registration of firm (Section 59) v. Any change in Form: It is also advisable that every change in the firm name of place of business should be duly notified on a special form to registrar. (SEC 60) The following rights relating to a firm may also be registered with the registrar of the firm with paying the fee. a. Discontinuance of business at once. Place and begins to carry on business at another place (Sec 61) b. An alteration, in the name and permanent addresses of the partners in the registered firm. c. A change in the constitution of the firm. (Sec. 63) d. A minor electing to become or not to become partner to the benefits to become partner to the benefits of partnership in a firm (Sec 63) (2). Penalty for false particulars: (Sec 70): A person, who provides false information to the registrar, shall be punished with imprisonment, which may extend to three months, or with fine, or both. BENEFITS OF REGISTRATION: Following are the benefits: (1) Suit by Partner against firm: When the firm is registered any partner can sue against the firm to achieve his rights. But in case of non-registration of the firm this facility is not available. (2) Suit by Partner against partner: If the firm is registered, a partner of the firm can sue against his copartner. But this facility, also not available in case of non-registration. (3) Suit by Firm against partners: A firm cannot sue his partners unless it is registered with the registrar. (4) Suit b Firm against third party: A registered firm can sue against third parties for their own rights arising from a contract or any deal. But in case of non- registration the firm cannot claim against third parties. Prepared By: H. HAFIZ ABDUL REHMAN 0321-6485593 vi.



Legal Protection: A registered firm has full legal protection from the Government because the firm has fulfilled all the legal requirements. But a non-registered firm has no such protection. (6) Protection to Incoming Partners: In case of registered firm, the rights of incoming partner are also protected. He can sue against the firm or partners for his rights. (7) Protection to Retiring Partners: When the firm is registered the partners have right to claim against the firm as well as co-partners in case of misconduct. In this way his rights are also protected at the time of his retirement. (8) Less Completion: When the name of the firm is registered, no one can tant the business with the firm name and cannot copy the firms product. In this way there are less chances of competition. (9) Credit Standing: In case of registration of firm, the firm is able to get loan from any bank or any financial institution from without any hesitation. (10) Trust and Confidence: It is the nature of the general public that they put trust on Government. So people put their trust and confidence a registered firm. (11) Government Facilities: All the Government facilities are available to the registered firms which are very useful for the success of business. EFFECTS OF NON-REGISTRATION Registration has not been compulsory for a partnership. It is entirely on the option of the firm, whether they want to get registered their firm or no. yet partnership act has brought indirect pressure by describing some disadvantage on an unregistered firm. Following are the disadvantages to which unregistered firms and are subjects. (1) Cannot Recover Thought Court: Section 69(1) say: that if there is any problem between the firm and partners they cannot recover it though court. (2) Right against third party: Section 68(2) say that a firm will not be entitled to enforce a contractual right against a third party, nor will the partner be entitled to do so by filing a suit in their own names instead of the name of the firm. (3) Entitled to counter claim: Section 69(3) says that neither the firm nor the partner will. When sued, be entitled to counter claim or set off. (4) Right not affected: The non registration, however does not affect the following right: a. Rights of Third Person: The right of third parties to file a suit against the unregistered firms or partners thereof the main object of registration is to protect the right of such third parties. b. Right of partners to sue: Section 69(3-a) says that the right of a partner to sue for dissolution of firm or for account of the dissolved firm, or to enforce any right or power to realize the property of an insolvent partner. c. Power of Official Receiver: Section 69(3-b) says that the power of an official receiver or court to realize the property an insolvent partner. d. Claim not Exceeded: Section 69(4-b) says that any suit or set-off in which the claim does not exceed to Rs.100. Prepared By: H. HAFIZ ABDUL REHMAN 0321-6485593