Partnership Deed
Drafting & Registration

A Partnership Deed is a legally binding written agreement between two or more partners that outlines the terms of their business relationship. It covers profit/loss sharing ratios, capital contributions, roles, salaries, and dispute resolution mechanisms under the Partnership Act, 1932.

While a partnership can technically exist verbally, a written and registered Partnership Deed is highly recommended and practically required. Banks will not open a partnership bank account without it, and courts rely heavily on a written deed to resolve any disputes between partners.

An unregistered partnership operates on a simple notarized deed. A registered partnership (Firm-C) is formally registered with the Registrar of Firms. A registered firm has the legal power to sue third parties for breach of contract, whereas an unregistered firm cannot.

Not necessarily. Many small businesses start with an unregistered, notarized Partnership Deed on stamp paper to open bank accounts and start operations quickly. However, registering with the Registrar of Firms is strongly advised for long-term legal protection.

If the profit and loss sharing ratio is not explicitly defined in a written Partnership Deed, the Partnership Act, 1932 dictates that all partners must share profits and losses equally, regardless of who contributed more capital or work.

Yes. A Partnership Deed can be amended through a supplementary deed. All partners must agree to the changes and sign the new document. If the firm is registered, the changes must also be notified to the Registrar of Firms.

A well-drafted Partnership Deed includes an exit clause detailing how a partner can resign, how their share will be valued, and whether the remaining partners can buy them out. Without this clause, one partner leaving can force the dissolution of the entire firm.

Yes, but it must be clearly stated in the Partnership Deed. Active or managing partners often take a fixed monthly salary for their operational work, and then receive their percentage of the remaining profits at year-end.

A partnership requires a minimum of 2 partners. Under Pakistani law, a standard business partnership can have a maximum of 20 partners (with some exceptions for professional firms like lawyers or accountants).

Yes, a foreign national can be a partner, but there are strict regulatory and security clearance requirements from the Ministry of Interior and State Bank of Pakistan. We generally recommend foreigners use an SECP Pvt Ltd structure instead.

In a traditional partnership under the 1932 Act, all partners have unlimited joint and several liability. This means if the business fails, partners' personal assets can be used to pay off the firm's business debts.