Procedure for Introduction of a Partner

Lokik Harit

Lokik Harit

Published on: Jun 10, 2025

Priya Gandhi

Updated on: Jun 10, 2025

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Introduction:

“Partnership” is 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 and “partners” are persons who have entered into partnership with one another.

Introducing new partner(s) in a partnership firm involves adding individual(s) to the firm as co-owner(s) sharing liabilities, profits and responsibilities. However, new partner(s) are not liable for any act of the firm done before they becoming partner(s). All such additions are governed by the Indian Partnership Act, 1932 and must be done in accordance with the procedure mentioned therein.

Applicable provisions:

Section 4, 31, 63, 72 of Indian Partnership Act, 1932

Mandatory Requirements:

1. Unanimous consent of the existing partners.
2. Rights, duties, capital contribution and profit-sharing ratio of the partners must be redefined and clearly documented in the partnership deed.

Procedure:

1. Drafting and Execution of a Revised Partnership Deed:
   
   • Drafting a new agreement to define the new partner’s role and responsibilities, as well as their capital contribution and profit-sharing ratio.
   • Such revised deed must be signed by all partners and properly notarized.
2. Intimation of the Introduction to the Registrar of Firms:
   Any change in the firm’s constitution must be notified to the Registrar of Firms within 90 days, in accordance with the procedure outlined in the state-specific Partnership Rules
3. Publication of Change:
   Publication must be made in the Official Gazette and at least one vernacular newspaper circulating in the district where the firm, to which it pertains, has its place or principal place of business.
4. File Necessary Amendment Application under following Acts as applicable:
   
   • Goods and Services Act
   • Shops & Establishment Act
   • Factories Act
   • Foreign Exchange Management Act
   • Inter-State Migrant Workmen Act
   • Private Security Agency Act
   • EPF
   • ESI
   • Other Labour Laws
   • Industry Specific Laws