A partnership may be a kind of business arrangement during which two or more people form a corporation. There should be two or more partners for a relationship to exist.
The Partnership Act of 1932 (the “Partnership Act”) defines a partnership as “a relationship between persons who have agreed to share earnings from a business carried on by all or any of them acting for all.” This definition lays out three basic elements for forming a partnership:
People who wish to form a partnership must enter into an oral or written agreement, the goal of which must be to share the profits of the business intended to be carried on by the partnership.
Therefore, the business must be carried on by all of the partners or by any of them acting for all of them. The Partnership Act doesn’t define the term “person.”
Registration of your partnership firm isn’t required, and there are not no consequences for failing to try to do so. However, it’s not recommended because an unregistered company is denied the subsequent rights:
A partner can not sue the firm or other partners in any court for the enforcement of any contract or partnership right conferred under the Partnership Act.
A contract right can’t be enforced by or on behalf of your firm in any court against a third party.
Furthermore, during a disagreement with a third party, the firm or any of its partners can not claim a set-off (i.e. mutual adjustment of obligations owed by the disputant parties to at least one another) or other proceedings.
QUICK FACTS ON PARTNERSHIP RESPONSIBILITY
Only if a partnership is registered in Bangladesh is it deemed an independent legal entity (i.e. break away from its owners).
All participants in a partnership are jointly and severally responsible for the partnership’s debts.
In Bangladesh, the notion of indebtedness Partnerships doesn’t exist.
Partnerships aren’t taxed at the entity level in Bangladesh, and profits are recognized as a part of each partner’s income and taxed at income tax rates.
MANAGEMENT & MEMBERS
A minimum of two and a maximum of 20 partners are required.
The partners are often individuals or businesses.
A partnership in Bangladesh, unlike a personal or public limited company, doesn’t have directors, shareholders, or a secretary; instead, the partners own and administer the corporate.
DOCUMENTS REQUIRED FOR PARTNERSHIP
The following information/documents are required to register a partnership in Bangladesh:
Proposed partnership name; suitably notarized partnership agreement; Form I; particulars of the partners; residential address of the partners; details of the partnership’s registered address; and Percentage of every partner’s profit share
REGISTRATION PROCEDURE FOR PARTNERSHIPS
The Registrar of Joint Stock Companies and Firms of Bangladesh (“RJSC”) can register a partnership.
The registration of a partnership consists of two steps: a) name reservation and b) entity registration. A partnership registration can usually be completed in one or two days under typical conditions.
STEP ONE: SELECTING A PARTNERSHIP NAME
The partners are entitled to call their partnership firm whatever they like, as long as they meet the subsequent guidelines:-
To avoid confusion, the names shouldn’t be too close or just like that of another current firm conducting similar operations. The rationale for this restriction is that a replacement firm’s reputation or goodwill might be harmed if it adopted an allied name.
Certain terms expressing or implying government sanction, approval, or favor are prohibited within the name.
Once you’ve selected a reputation, go to the RJSC website and submit an application for name clearance.
STEP 2: PREPARATION OF A PARTNERSHIP AGREEMENT
A partnership document should be prepared.
The firm’s name and address, also the names and addresses of all partners;
The nature of the business to be conducted;
Date of business start; Duration of Partnership (whether for a group duration or indefinitely);
Each partner makes a financial contribution;
The ratio of share among partners;
Rules to follow in the event of a partner’s retirement, death, or admittance; and
The above are the bare minimums that have got to be included in all partnership agreements. Any longer terms could also be mentioned by the partners.
The Partnership Deed should be written on stamp paper and signed by all partners in compliance with the Stamp Act. It should then be notarized.
STEP 3: REGISTER YOUR RJSC PARTNERSHIP DEED
The cooperation agreement was signed and filled out. The RJSC should receive Form I. Officials from the RJSC will examine these documents.
When the officials are pleased with the points indicated in the partnership deed, they need to enter the statement into the Register of Firms and issue a Certificate of Registration. Consider your overall capital and therefore the amount of cash required.
Resources: Small Business Guide to Charitable Giving and Tax Deductions in 2022