Registration of Partnership Firm:

Registration is Optional:

Registration of partnership firm is not necessary. According to Partnership Act, 1932, if the partners so desire, they can get the firm registered with the Registrar of the firms. The unregistered firm suffers from a number of problems.

Meaning of Registration:

Registration does not provide any legal entity to the partnership firm. Registration of the partnership firm is merely a reliable evidence of the existence of the firm.

Registration Process:

The procedure of registration of the partnership firm is as follows:

1) Submission of Application

2) Certification

1) Submission of Application: For getting a firm registered, an application in the prescribed form with the prescribed fee is submitted to the Registrar of the firms. The application must be signed by all the partners. The application must contain the following particulars:

  • The name of the firm.
  • The principle place or places of the business of the firm.
  • Date of commencement of the firm.
  • Full names and addresses of the partners of the firm and the date of their joining.
  • The duration of the firm or the object for which the firm is formed. 

2) Submission of Application: The registrar then examines the particulars given in the statement and sees whether the entire required legal obligations have been fulfilled or not. Then registrar enters the firm’s name in the Register of Firms and issues a certificate of registration. This completes the registration process.

Effects of Non-Registration:

The effects of non-registration are as under:

1) Suit by Partner:

If any dispute arises among the partners or between a partner and the firm or between a partner and ex-partners regarding the rights arising from the contract, a partner of unregistered firm can not file a suit to settle such disputes. However, one partner against the other can bring criminal proceedings. Thus if partner steals the property of the firm, any partner can file a suit

2) Suit by Firm:

An unregistered firm cannot file suit against a third party for the enforcement of any right arising from a contract. However criminal proceedings can be brought against the wrong doers.

3) Suit by the Firm against Partner:

The firm cannot sue any partner of the firm for the enforcement of any right arising from a contract.

4) Suit by Third Party:

A third party can file a suit against the firm or its partners to enforce his rights.

5) No Claim for Adjustment:

A firm cannot claim adjustment of the amount exceeding Rs.100 payable and receivable by the firm. For example, a firm has to pay Rs.500 to Mr. A who owes Rs.800 to the firm, the firm can not claim adjustment and enforce in the court.

Exception to Registration:

The non-registration of the firm does not affect the following:

  • The third party can sue the firm whether registered or not.
  • The partners can sue for the dissolution of the firm.
  • The partners can sue for the accounts of a dissolved firm.
  • The partners can sue for the realization of the property of a dissolved firm.
  • The dissolved firm can sue to recover damages for the breach of contract.

The firm and its partners can sue third party for the adjustment

Advantages of Registration:

The following are the advantages of a registered firm:

1) Advantages to the Firm:

  • The registered fim can sue any partner of the firm.
  • The registered firm can file a suit against the third party for the enforcement of the rights arising from contract.
  • The registration increases the goodwill of the firm because people think that the details about the firm are with the Registrar which can be obtained in case of need.
  • The registered firm can claim adjustment form the third party.

2) Advantages to the Partners:

  • The partners of registered firm can sue in the court to settle their dispute.
  • The partners can sue the firm for their claims.
  • In case of registered firm , the new person feels less doubt on becoming a partner because he knows that in dispute , he can take the help of court.
  • In case of registered firm, the person who leaves the firm cannot be held responsible for the firm’s debts after their retirement form firm because the record of the Registrar of firms will show that they have left the firm.

3) Advantages to the Creditors:

  • The partners of a registered firm cannot deny from the membership of the firm to the creditors.
  • The creditors of the firm can hold all the partners liable for the payment of their debts due by the firm.

 

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