Deed of Dissolution of Partnership Firm

A Deed of Dissolution of Partnership Firm ("Deed") is a legal document that formally terminates the existence of a partnership firm. The Deed generally covers the terms and conditions agreed upon by all Partners regarding the dissolution of the partnership.

The partnership dissolution can be initiated on several occasions:

• mutual agreement among all partners;
• a court order; or
• the insolvency or demise of one of the partners.

The initial step towards the dissolution is settling all legal and financial obligations of the partnership. This includes pending cases, debts, loans, etc.

Once the liabilities are settled, the remaining assets or profits, if any, can be distributed among the partners in the agreed proportion.

How to use this document?

The Deed covers the following major clauses:

• Reason for dissolution: this covers the reason for the dissolution of the partnership.
• Date of dissolution: this outlines the date on which the partnership will come to an end and the partners will no longer be bound by the terms of the Partnership Deed after this date.
• Appointment of liquidation partner and account: this covers who will be acting as the liquidating partner responsible for executing the responsibilities under the Deed and the accountant responsible for assessing the assets and liabilities.
• Settlement of outstanding liabilities: this covers how the outstanding liabilities of the partnership be settled including the proportion at which the liability will be divided among the partners if it exceeds the assets of the partnership. Usually, the ratio at which the liabilities are distributed will already be included under the Partnership Deed.
• Settlement of Assets: this outline how the remaining assets of the partnership, after settling the liabilities, are distributed among the partners. Usually, this ratio at which the distribution of the remaining assets is already mentioned under the Partnership Deed.
• Confidentiality: this clause states that all partners shall keep confidential information regarding the partnership from disclosing to any third party for a certain period.

The dissolution of the firm is only possible when all partners or such a number of partners as mentioned in the Partnership Deed approve and sign this Deed.

Once prepared, the Deed shall be stamped as per the state laws where the partnership is located. It is better to get the Deed notarized to avoid any disputes in the future.

If the partnership is registered, the information regarding dissolution shall be communicated to the concerned registrar within 90 days from the date of dissolution (i.e. from the date of signing this Deed).

Applicable law

Major provisions under this Deed will be covered under the Indian Partnership Act, 1932 and the Indian Contract Act, 1872.

How to modify the template?

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.