Partnership Registration
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Partnership Registration
পার্টনারশিপ ফার্ম নিবন্ধন
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Introduction
Partnership registration in Bangladesh involves several steps: choosing a name, preparing a partnership deed, and submitting the deed and other required documents to the RJSC. To register a partnership firm, one must submit an application along with the requisite documents and fees.
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Partnership Business Overview
A partnership deed is a written legal document containing an agreement between two or more individuals intending to do business together and share profits and losses. It is also known as a partnership agreement.
The Partnership Act, 1932 defines a partnership as 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. Three minimum requirements constitute a partnership:
• An agreement entered into orally or in writing.
• The object must be to share business profits.
• The business must be carried on by all partners or by any of them acting for all.
Note: The term "person" is not defined by the Partnership Act.
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Implications of Non-Registration
Registration is not compulsory, and there are no penalties for non-registration. However, it is advisable as unregistered firms are denied specific rights:
• A partner cannot file a suit against the firm or other partners to enforce rights arising from the contract or the Partnership Act.
• The firm cannot enforce rights arising from a contract against any third party in Court.
• The firm or its partners cannot claim a set-off (mutual adjustment of debts) in disputes with a third party.
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Quick Facts: Liability & Tax
• Liability: A partnership has a separate legal identity in Bangladesh only if registered. Partners are jointly and severally liable for the partnership's debts. The Limited Liability Partnership (LLP) concept does not exist.
• Taxation: Partnerships are not taxed at the entity level; profits are treated as part of each partner's personal income and taxed at personal rates.
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Members & Management
A partnership must have a minimum of 2 and a maximum of 20 partners. Partners can be natural persons or companies. Unlike limited companies, partnerships do not have directors or secretaries; the partners own and run the business.
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Required Documents
To register, the following are needed:
• Proposed partnership name.
• Partnership agreement duly notarized.
• Form I.
• Particulars of the partners.
• Residential addresses of the partners.
• Details of the registered partnership address.
• Percentage of profit share for each partner.
Registration Procedure
Registration is handled by the Registrar of Joint Stock Companies and Firms (RJSC). The process involves two steps: name reservation and entity registration. Under normal circumstances, registration can be completed within one to two days.
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Step 1: Choosing the Name
Partners may choose any name subject to rules:
1. The name must not be identical or too similar to an existing firm to avoid confusion/injury to goodwill.
2. The name must not imply Government sanction or patronage.
Once selected, apply for name clearance via the RJSC website.
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Step 2: Prepare Partnership Deed
A partnership deed must be prepared on stamp paper per the Stamp Act, signed by all partners, and notarized. It typically contains:
• Name and Address of the firm and partners.
• Nature of business and commencement date.
• Duration (fixed or indefinite).
• Capital contribution and profit-sharing ratio.
• Rules for retirement, death, or admission of a partner.
Partners may include additional clauses as needed.
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Step 3: RJSC Registration
The notarized deed and filled Form I must be filed with the RJSC. Officials will review the documents. Upon satisfaction with the points in the deed, they will record an entry in the Register of Firms and issue a Certificate of Registration.
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General Context
Various business types exist in Bangladesh, including Proprietorships and Limited Companies. A Partnership Firm is formed under the Partnership Act 1932, with RJSC as the sole registering authority. It involves two or more similar-minded professionals creating a voluntary agreement to share profits. Registration is now essential for opening bank accounts and accessing legal facilities.
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Partnership Deed Details
The Partnership Agreement (Deed) usually includes:
• Name, Present, and Permanent Address of Partners.
• Name and Address of the Firm.
• Nature of Business.
• Duration of Partnership.
• Profit share and Capital contribution of each partner.
• Terms of Retirement.
• Mode of Management.
• Interest on Borrowings.
• Dissolution of Partnership.
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Submission Details (Form I)
A firm can be registered at creation or subsequently. An application on Form I must be filed including:
• Name Clearance Certificate.
• Date of Establishment and Duration.
• Principal place of business address.
• Joining Date and Particulars of Partners.
• Particulars of Business.
We suggest registering immediately to avoid unexpected circumstances.
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Benefits of Partnership
• Capital: More partners allow for more capital investment, flexibility, and progress potential.
• Ease: Easier to register, run, and manage with less strict regulations than companies.
• Synergy: Partners bring diverse ideas, skills, and brains to solve problems and share responsibilities.
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Post-Registration Documents
To start operations, you should obtain:
• Trade License.
• TIN Certificate for the registered firm.
• Bank Account.
• VAT Registration Certificate.
• Import/Export Registration Certificate (if applicable).
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Common Questions
• How to register? Register with the Registrar of Joint Stock Companies and Firm of Bangladesh (RJSC).
• Member limits? Minimum 2, maximum 20 partners.
• Is agreement required? Yes, a partnership agreement is required.
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Note: While registration is not compulsory, it is highly advisable to secure legal rights and banking facilities.
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