Add/Removal of Proprietor/Partner/Director

In partnership firms, the board of directors, partners, or proprietors is a governing body that makes all the decisions regarding the operation of the business. Sometimes, a firm may need to welcome or bid adieu to its members due to the reconstitution of the partnership, retirement, or untimely death of a partner. 

CompRegi understands the necessity and importance of the procedure of addition or removal of a partner/proprietor/director and the timely execution of the procedure according to the law. We are here to help guide you through the whole transition by adhering to the Indian Partnership Act, 1932, and Companies Act, 2013, to help your business grow without any hindrance. 

Documents required to add/remove proprietor/partner/director

GST Certificate

Documentary proof of the change

Add/Removal of Proprietor/Partner/Director Cost

We at Compregi believe in complete transparency in the complete registration process of your company. Below mentioned cost structure includes all the necessary government fees required at multiple stages of registration.

GST RETURN FILLING

799/-
  • Free Consultancy
  • Free Search Check
  • Preview before Filing

ADD/REMOVER OF PROPRIETOR/PARTNER/DC

799/-
  • Free Consultancy
  • Free Search Check
  • Preview before Filing
  • 100% Peace of Mind

GST AMANDMENTS IN CORE AND NON-CORE FIELDS

799/-
  • Free Consultancy
  • Free Search Check
  • Preview before Filing

Reason for Add/Removal of Proprietor/Partner/Director

A business may want to opt for the expulsion of a partner or add a new partner or a proper director for many reasons, including:

Virtual Seal for both the directors to sign the documents.

A Director proprietor or partner resigns from the partnership at will through a partner resignation letter

One of the parties or directors is voluntarily exiting from the business and has submitted a partner resignation letter due to personal interest, differences of opinion conflicts, or other ventures.

Due to the unfortunate death of a director or a partner, or proprietor, their position becomes vacant.

A firm may need to expel its proprietor, partner, or director if the individual fails to fulfil the duties or liabilities of partners in the partnership firm, is non-performing, or breaches the partnership agreement deed.

Sometimes, the addition or removal of a partner proprietor or director is necessary to reconstitute a partnership firm.

Reconstruction of the partnership or positions of proprietor or director may be necessary due to reconstitution of the partnership firm after the organization's business goals change.

How to Add/Remove Proprietor/Partner/Director

A firm may add or remove a proprietor/ partner/ director according to the Partnership Act 1932 rules by following the regulatory and legal procedures: 

01
The firm needs to prepare the documents, including resignation letters, death certificates, or retirement letters, to specify why our new partner admitted
02
A board meeting with other partners/[proprietors/director to discuss the removal of the dead or outgoing partner
03
If third-party stakeholders are involved, the firm must also inform them of a meeting.
04
The company must amend the partnership deed to welcome new partners/proprietors/directors according to the prescribed partnership deed amendment format.
05
The company must submit the necessary forms and documents for this step to the regulatory bodies or firms' registrars.
06
The company must maintain compliance to all the legal formalities so that the right of outgoing partner/proprietor/director is not violated.

What are the criteria to remove proprietor/Partner/Director?

The requirements for the removal of a partner from the partnership deed format and from the company are as follows-

The partner/proprietor/director violates the rules of the partnership deed due to lousy relation of the partner to third parties or due to any misconduct that hinders the growth of the organization

The partner/proprietor/director is unfit to perform their duties due to health or any other issue

A partner/proprietor/director may be removed due to a massive amount of partnership loan, which liabilities and damages the reputation of the firm

The partner/proprietor/director is disqualified to hold their position due to legal procedures or criminal conviction.

What is the eligibility to be a Proprietor/Partner/Director of the company?

The Indian Partnership Act has been in force since 1932, and it mentions the criteria for an individual to be eligible to become a partner/proprietor/Director. The requirements are as follows:

  • Partner 

 To become a partner, an individual must be 

  • At Least 18 years of age and can enter into a contract
  • Willing to enter into the proprietorship deed with consent
  • Has access to the needed capital or skill to ingestion the firm
  • Agrees to share the profit or loss percentage as a partner
  • Complaints to all the rules and regulations mentioned in the two partnership deed
  •  Has good faith towards the firm and maintains cordial relations with other players and stakeholders
  • Director

One individual can become a director of a partnership firm if they fulfil the following criteria.

  • The director is chosen and appointed by the partners/proprietors and stakeholders or board of directors through an amendment or a deed.
  • Is above 18 years of age and has a sound mind
  • Has obtained a Director Identification Number(DIN) from the Ministry of Corporate Affairs
  • Has given their consent to the post
  • Owe their fiduciary duties to the firm and the stakeholders
  • Complies with the company regulations and maintains good ethics

 

  • Proprietor

One can become a partner or can be added as a new partner in a firm or partnership business if they fulfil these conditions:

    • The person is an adult and has given their consent to become included in the deed
    • Have  registered with the regulatory authority(in exceptional cases including GST or business license)
    • Acknowledges the liability for business debts or other obligations
    • Has registered the firm name or the business under their name
    • Complies with the business rules, tax rules, and other rules and regulations

Documents required for Add/Removal of Proprietor/Partner/Director

To add/remove a proprietor/partner/director from a partnership firm, here are the needed documents:

  • Addition
    • Identity proof and address of the person(Aadhaar card, EPIC or passport)
    • Permanent Account Number or PAN Card to file taxes  
    • A new deed featuring the  amendment in the partnership deed
  • Removal
    • Letter from the individual that specifies the cause of retirement of a partner in a partnership firm
    • Partnership deed of an existing firm  that bears their name
    • Resignation letter from the partner
    •  Death certificate of the partner/proprietor/director in case of their death
    • Notice that describes the reconstitution in partnership 
    • Board resolution describing the removal reason

FAQs

Is registration necessary for a new partner?

If there are a certain number of partners, the firm may need to register the new partner with the regulatory authorities.

What are the documents needed to add a new proprietor?

To add a new proprietor, the Identity and address proof of the new proprietor, trade license, GST license, agreement with the company, and the deed bearing the new proprietor's name.

What can lead to the expulsion of a proprietor?

A proprietor can be removed if they engage in misconduct, are the subject of criminal proceedings, or become unfit to perform their duties. 

What are the minimum and maximum numbers of members in a private limited company?

The minimum number of members required to start a private company is 2. All these members have limited liability, and the maximum number of members goes up to 200. 

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