Partnership Deed

A Partnership Deed is the written contract that establishes a partnership firm under the Partnership Act, 1932. It sets out who the partners are, what each is bringing in (capital, skill, property, machinery), how profits and losses are shared, who signs cheques, how decisions are made, how a new partner is admitted, and — the single most-litigated part — how an exiting partner's account is settled. In Bangladesh, a poorly drafted or missing Partnership Deed is the single largest cause of small-business break-ups. The Act supplies a set of default rules where the deed is silent, but those defaults are rarely what any partner actually wants, so getting the deed right at the outset is the single highest-return legal task in setting up a new venture. Registration with the Registrar of Joint Stock Companies (RJSC) is optional under the Act, but effectively essential for any partnership that plans to sue, hold contracts, or open a bank account.

Stamp & registrationExecuted on non-judicial stamp paper of a Tk. 2,000 denomination (higher for larger firms), signed by all partners with at least two witnesses. For the firm to be able to sue in its own name and enforce contracts against third parties, register with the RJSC — the Partnership Act, 1932 sharply restricts an unregistered firm's ability to sue. Notarisation is not compulsory but adds evidentiary weight. Because the exact procedural sub-sections and exceptions matter in litigation, confirm the operative wording with your lawyer.

What this agreement typically contains

Name of the firm
Full identity of each partner — name, address, NID, phone
Nature and place of the business
Duration of the partnership (fixed term / at-will)
Capital contribution by each partner (cash, property, machinery)
Profit and loss sharing ratio
Salary or remuneration to working partners (if any)
Interest on capital and on drawings
Bank account signing authority
Decision-making rules (majority / unanimous for key items)
Rules for admission of new partners
Rules for retirement, expulsion, or death of a partner — valuation formula
Non-compete restriction on an outgoing partner
Dispute-resolution mechanism (arbitration is common)
Signatures of all partners and two witnesses

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Frequently asked questions

Is registering the partnership firm compulsory in Bangladesh?: Registration under the Partnership Act, 1932 is technically optional — the partnership is valid whether registered or not. However, the Act sharply restricts an unregistered firm's ability to sue in court to enforce a contract, and generally bars a partner from suing another partner over rights arising from the partnership contract, until the firm is registered. In practice, this makes registration with the Registrar of Joint Stock Companies (RJSC) essential for any partnership that will hold real contracts, open a bank account, or ever need to litigate. Do it as part of the initial deed rather than as an afterthought. The precise wording of the restriction has statutory sub-sections and specific exceptions, so confirm the current text with a lawyer before acting on it.
What happens if a partner leaves and the deed has no exit clause?: The default rules of the Partnership Act, 1932 apply — which usually means the departing partner is entitled to (a) their share of the capital account, (b) their share of goodwill computed as at the date of departure, and (c) a statutory entitlement to either interest on that outstanding balance until paid, or a proportionate share of the firm's subsequent profits earned using their capital, whichever the outgoing partner elects. Those defaults are almost never what the remaining partners actually want, which is exactly why a Partnership Deed should include an explicit exit clause, a specific valuation formula for goodwill, and a payout schedule from day one — and if you plan to rely on the statutory default figures rather than your own contract, verify the current interest rate and mechanics with a lawyer against the operative text of the Act.

Other contracts in this category

What this agreement typically contains

Name of the firm

Full identity of each partner — name, address, NID, phone

Nature and place of the business

Duration of the partnership (fixed term / at-will)

Capital contribution by each partner (cash, property, machinery)

Profit and loss sharing ratio

Salary or remuneration to working partners (if any)

Interest on capital and on drawings

Bank account signing authority

Decision-making rules (majority / unanimous for key items)

Rules for admission of new partners

Rules for retirement, expulsion, or death of a partner — valuation formula

Non-compete restriction on an outgoing partner

Dispute-resolution mechanism (arbitration is common)

Signatures of all partners and two witnesses

Frequently asked questions

Is registering the partnership firm compulsory in Bangladesh?

Registration under the Partnership Act, 1932 is technically optional — the partnership is valid whether registered or not. However, the Act sharply restricts an unregistered firm's ability to sue in court to enforce a contract, and generally bars a partner from suing another partner over rights arising from the partnership contract, until the firm is registered. In practice, this makes registration with the Registrar of Joint Stock Companies (RJSC) essential for any partnership that will hold real contracts, open a bank account, or ever need to litigate. Do it as part of the initial deed rather than as an afterthought. The precise wording of the restriction has statutory sub-sections and specific exceptions, so confirm the current text with a lawyer before acting on it.

What happens if a partner leaves and the deed has no exit clause?

The default rules of the Partnership Act, 1932 apply — which usually means the departing partner is entitled to (a) their share of the capital account, (b) their share of goodwill computed as at the date of departure, and (c) a statutory entitlement to either interest on that outstanding balance until paid, or a proportionate share of the firm's subsequent profits earned using their capital, whichever the outgoing partner elects. Those defaults are almost never what the remaining partners actually want, which is exactly why a Partnership Deed should include an explicit exit clause, a specific valuation formula for goodwill, and a payout schedule from day one — and if you plan to rely on the statutory default figures rather than your own contract, verify the current interest rate and mechanics with a lawyer against the operative text of the Act.