Ameet Kumar (Proprietor) 17 July 2011

Partnership Deed only for Inbestment purpose

We are seven friends who want to invest in property with their respective capital which is not equal. My queries are as follows :

* Can we float a partnership company to invest in that property ? And if yes, what are the legal parameters ?

* The company is only meant for Investment purpose and no other business is attribuited to be done in near future , we shall sell the invested property within 3-4 years time on appreciation and share the profits as per the capital sharing ratio. So, by any chance, in this period of 3-4 years, we again want to invest in a property with their respective capitals, which we may again keep it for example say 3-4 years, then how do we frame our Partnership deed.

Please let me know.

Best,

Ameet Kumar

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1 Replies

R.Ramachandran (Advocate) 17 July 2011

It is possible to do business of this nature under a partnership. For this, you have to approach a lawyer, get a proper partnership agreement prepared, get the Partnership Deed Registered, inform the Income Tax Department about your partnership in Prescribed Form-XI (under Rule 22), maintain proper accounts, open Bank Account in the name of the partnership firm, file income tax returns etc. etc.

There are whole lot of issues that have to be touched and covered properly in the partnership agreement like - the property first acquired will be in whose name; how you will safeguard that the property is not sold by any of the partners behind the back of others; what if one of the partner refuses to sign at the time of sale; what if any of the partners want to leave the partnership in the middle; who will operate the bank accounts; etc. etc. have to be taken care of.

TO PUT IT BLUNTLY, IT IS NOT THAT SIMPLE TO GET INTO A PARTNERSHIP - JUST LIKE 5 PERSONS COMING TOGETHER, PURCHASING, SELLING, SHARING THE PROFIT ETC. BUT THERE HAS TO BE A PROPER LEGAL DOCUMENT BINDING ALL THE PARTNERS.

For this purpose, you have to approach a lawyer and get the partnership deed drafted.