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Procedure to Register a Firm

Procedure to Register a Firm

The registration of partnership is not compulsory under Indian Partnership Act. In England registration is, however, compulsory. In India there are certain privileges which are allowed to those firms which are registered. Unregistered firms are prejudiced in certain matters in comparison to registered firms.

Though directly the registration of firms is not compulsory but indirectly it is so. To avail of certain advantages under law the firm must be registered with the Registrar of Firms of the State. Registration of a firm does not provide a separate legal entity to the concern as in the case of Joint Stock Company.

Partnership does not need registration for coming into existence because it is created by an agreement among two or more persons. The registration of a firm merely certifies its existence and non-registration does not invalidate the transactions of the firm.

Procedure for Registration:

A simple procedure is followed for getting a firm registered. This procedure is divided into two parts:

(i) Filing an Application:

The first thing to be done is to file an application with the Registrar of Firms on a prescribed form. A small amount of registration fees is also deposited along-with the application.

The application should contain the following information:

(a) The name of the firm.

(b) The principal place of business of the firm.

(c) The names and addresses of partners and the dates on which they joined the firm.

(d) If the firm is started for a particular period then that period should be mentioned.

(e) If the firm is started to achieve a specific object then it should also be given.

The application form should be signed and verified by each partner or by his duly authorized agent.

(ii) Certificate:

The particulars submitted to the Registrar are examined. It is also seen whether all legal formalities required have been observed or not. If everything is in order, then the Registrar shall record an entry in the register of firms. The firm is considered registered thereon.

Alteration of Particulars:

Whenever a change or alteration is made in any of the following particulars then it should be communicated to the Registrar of firms and a suitable change is made in the register. The change to be made is sent in a prescribed form and with the prescribed fees.

Following changes or alterations are to be sent to the Registrar:

(i) Any change in the name of the firm.

(ii) Any change in the principal place of business. The change in name or principal place of business almost requires a new registration. These changes should be sent in a prescribed form and should be signed by all the partners.

(ii) When constitution of the firm is changed i.e., an old partner may retire or a new partner may be added.

(iv) Any change in the name of a partner or his address.

(v) When a minor partner attains the age of majority and he elects to become or not to become a partner.

(vi) When the firm is dissolved.


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

(i) The partners of an unregistered firm can bring a suit for the dissolution of the firm or for the settlement of its accounts. They can also use the property of a dissolved firm.

(ii) The right of an official receiver or official assignee is not affected for realizing the share of the insolvent partner, whether the firm is registered or not.

(iii) The unregistered firm or its partners may use or claim a set-off where the subject matter of the suit does not exceed Rs. 100 in value.

(iv) The third parties can always use a firm whether it is registered or not.

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.

Procedure to register a firm

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