An existing partnership firm having two partners is reconstituted due to following events:
Partner A - 75 % shares
Partner B - 25 % share - resigns from the partnership by giving a letter of resignation as per one of the clauses of the first partnership deed. Also the full deed is attached reproduced below :
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PARTNERSHIP DEED- ADMISSION AND RECONSTITUTION
This deed of reconstitution of Partnership deed executed on the First day of April the year Two Thousand and five between :
1. Partner A , S/o ……………….. aged about ………..years .residing at ……………………………….., hereinafter called the party of the First Part.
2. Partner B , S/o ……………….. aged about ………..years .residing at
……………………………….., hereinafter called the party of the Second Part.
Whereas the party of the First part had been carrying on the business under the name & style of “M/s. FIRM ABC ENTERPRISES” in ……………. under a Deed of Partnership dated Fourth day of August nine thuosand and ninety three (04.08.1993)along with Mr. XYZ.
WHEREAS Mr. XYZ has retired from the firm on 31 st March 2005 at his own will and;
WHEREAS party of the Ist Part has joined hands with the parties of the 2nd Part as a partner on 1st April, 2005; and
WHEREAS the assets and liabilities of the firm M/s FIRM ABC Enterprises have been taken over by the parties hereto at its book value as on 31st March 2005 as a going concern; and
WHEREAS it is considered proper and necessary to put it in writing the terms and conditions of Partnership.
Now the parties heretofore hereby execute this Deed of Partnership out of their own free will on the terms and conditions noted hereunder:
1. That the partnership business shall continue to be carried on under the name and style of M/s “FIRM ABC ENTERPRISES” .
2. The partnership shall be as and from 1st day of April 2005 until three months notice in writing is given by one the partners to the others of his intention to retire from the partnership.
3. The business of the Partnership shall be carried on at ……………………………………… or at such place or places the partners may agree from time to time.
4. The partnership shall be at will.
5. That all the assets and liabilities of the erstwhile constituted firm shall be taken over by the newly constituted firm and the balance standing to the credit of the account of the retired partner along with his share of profit upto the date of his retirement shall be duly discharged after making adjustments for the amounts paid to him and standing in the books of accounts.
6. The main business of the partnership shall be Export, Import, Trading briefly given below:
EXPORTS: Granite Blocks, rough dressed, cut and of polished, other natural stones,
handicrafts, stone crafts, industrial and precision granite products, semi
precious stones and minerals.
IMPORTS: All general commodities and engineering items for own consumption.
TRADING: Buy and sell industrial manufactured items, natural stones, granites
rough blocks, cut and polished stones, handicrafts, stone crafts and
industrial consumable items.
QUARRYING: To take up contract / sub contract works for developing, raising,
producing granite blocks and also acquiring / developing new
quarries.
And all or anyother new line of business beneficial to the partnership shall be
carried on.
7. The capital of the partnership shall be decided by the partners and the initial capital of Rs. 10 lakhs will be contributed as follows:
a. PARTNER A Rs.3,75,000/-
b. PARTNER B Rs. 1,25,000/-
The partners shall bring in additional capital mutually agreed upon among the
partners
The profit and losses of the partnership shall be divided according to the capital
investment ratio.
The partners shall bring in moneys as loans, shall carry interest as mutually agreed
upon by partners.
The drawings of each partner shall be decided mutually by the partners.
8. ACCOUNTS
a. Proper and regular accounts of the affairs and transaction of the partnership shall be maintained and kept at the principal place of business of partnership.
b. The accounts of the partnership shall be closed every year on 31st March and shall be audited by a Chartered Accountant to determine and the profit and loss account and balance sheet as at 31st March every year shall be drawn.
c. The profit and loss shall be adjusted to partners’ current account in the ratio agreed upon as per clause 5 of this deed.
9. BANK ACCOUNTS
The bankers of the partnership shall be continued with State Bank of Mysore or such banks as may be agreed upon between the partners. Partner A and PARTNER B have the power to open and operate on the banks accounts in the firm’s name severily and independently draw, endorse cheques or any other negotiable instruments, withdraw monies, borrow monies, avail overdraft and other facilities from banks and do other things necessary for the purpose of firm business.
10. DUTY OF PARTNERS
a. Each partner shall at all times keep indemnified the other partner and his representatives and the property of the partnership against such partners separate engagements, of all actions, proceedings, charges, demands or claims in respect thereof.
1
2 b. Neither partner without the consent of the other partners :
i. Assign or mortgage his share in the partnership firm
3 ii. Compound, relinquish, discharge any debt due or owing to the partners without receiving the full amount.
11. The death, insolvency or retirement of any partner shall not dissolve the firm and the
remaining partners shall be entitled to continue the business. The legal representative
of the deceased, retiring or insolvent partners shall be entitled to be paid out the
amount due to him as on the date of such death / retirement or insolvency as the case
may be.
12. The good will, if any, shall be computed mutually agreed , and shall share in the
profit sharing ratios in the event of admission, retirement and death or at the time of
dissolution.
13. The partners shall have power by mutual consent to alter or make any amendments to
the conditions of the partnership deed and any correspondence to this effect by and
between the partners shall be read as part and parcel of this deed.
14. Any dispute or any question in connection with the partnership shall be settled by
arbitration and the partners shall not rush to court.
In witness whereof the partners hereto have executed on the day and the year first above written in presence of :
Witness: Signature of Partners
1. 1.
2. 2.
Partner C - joins the firm in the place of partner B by taking over 25% share of the outgoing partner.
Now for the event of the reconstituion, the following documents were created:
1) Balance Sheet & Profit and Loss A/c as on the date of reconstution in which the partners A & outgoing partner have signed
2) Resignation letter received by the Firm from outging partner
c) Reconstitution Deed was prepared with Partner A & Partner b signing the deed.
The doubt raised is should outgoing Partner also sign this Deed of Reconstution ?
