In this article
- Why a partnership deed for CA firm partners needs more care
- Clauses 1 to 3: who, what name, and does the firm continue
- Clauses 4 to 6: money
- Clauses 7 to 9: running the firm
- Clauses 10 to 12: exits and protection
- ICAI steps when the deed changes
- Getting the deed made, and keeping it alive
- Questions people ask
- Sources
- A CA can enter into partnership only with a chartered accountant in practice or persons ICAI has prescribed (Clause (4), First Schedule).
- Fees and profits may be shared only with the persons the Code lists, such as a partner, a retired partner or the legal representative of a deceased partner.
- Without a clause, the Partnership Act's defaults apply: equal profit shares, and dissolution on the death of a partner.
- Settle the uncomfortable clauses (death, illness, retirement, exit) while everyone is well.
- Tell ICAI of any change in the firm's registered particulars within one month (Regulation 190(7)).
A partnership deed for CA firm partners is usually signed in a hurry: the profit ratio is agreed over tea, the lawyer fills in a standard format, and nobody reads it again until something goes wrong. Most partner disputes in small firms come from things the deed never covered. This guide is for CAs about to form a firm, admit a partner, or fix an old deed. It names the 12 clause areas to settle together before the lawyer drafts, says why each one matters, and sets out the ICAI rules that limit what a CA firm's deed can say.
This is not legal advice and gives you no draft wording. It gives you the questions to answer, in writing, and then take to your lawyer and tax adviser.
Why a partnership deed for CA firm partners needs more care
A CA firm's deed has to satisfy two sets of rules. The Indian Partnership Act, 1932 fills in defaults where partners have not agreed something. ICAI's Act, Regulations and Code of Ethics add limits that ordinary businesses do not have: who can be a partner, who can share profits, who can sign, and what the firm can be called. A clause that is fine for a trading firm can be misconduct for a CA firm.
Clauses 1 to 3: who, what name, and does the firm continue
1. The partners and their eligibility
Why it matters: one ineligible partner turns the whole arrangement into a conduct problem. Clause (4) of Part I of the First Schedule makes it misconduct for a CA in practice to enter into partnership with anyone other than a chartered accountant in practice, or persons of other professional bodies that ICAI has prescribed. A CA employed by your firm is not a partner, however senior.
2. The firm name
Why it matters: the name carries the firm's ICAI history, and a split without a rule becomes a fight over it. Regulation 190(1) says a firm must get ICAI's approval before practising in a firm name (Form 117). Check the current ICAI firm-name rules and the Self-Service Portal instructions before you settle the name.
3. Start date, duration and continuity
Why it matters: without a continuity clause, one death can end the firm. Under section 42 of the Partnership Act, a firm is dissolved by the death of a partner unless the partners have agreed otherwise. A continuity clause protects clients, staff and the firm's ICAI history.
Clauses 4 to 6: money
4. Capital and current accounts
Why it matters: when a partner leaves, the first argument is about how much capital comes back, and when.
5. Profit sharing
Why it matters: an unspoken ratio breeds resentment the day effort starts to differ. Section 13(b) of the Partnership Act says partners share profits equally unless they agree otherwise. Clause (2) of the First Schedule allows a CA in practice to share fees or profits only with the persons it lists, such as another member, a partner, a retired partner or the legal representative of a deceased partner. A relative who is not a partner cannot be given a "share". How partner remuneration and interest are taxed is a separate question for your tax adviser.
6. Drawings
Why it matters: drawings set in a good year become a strain in a lean one, and nobody wants to be the partner who raises it.
Money is where most partners get stuck. Equal shares, fixed plus variable, points, or each partner's own clients: every model suits a different firm and carries a different risk. Pick one on purpose, and write a review date into the deed.
Partner Governance & Succession is 13 short lessons for 2 to 5 partner firms: roles, profit-sharing models, capital and drawings, decision rights, the partners' meeting, disagreements, new partners, retirement, death or incapacity, succession and a one-page partners' charter.
Clauses 7 to 9: running the firm
7. Roles and signing
Why it matters: if nobody owns quality, billing or staff, each partner assumes another one does. Section 26 of the CA Act says only an ICAI member may sign documents on behalf of a CA firm in its professional capacity, and Clause (12) makes it misconduct to let a non-member, or a member who is not a partner, sign reports or financial statements for the firm. Write that rule into the deed and the office manual.
8. Decision rights and meetings
Why it matters: a written list of who decides what prevents a lot of quiet resentment, and a regular partners' meeting gives disagreements somewhere to go.
9. Admitting a new partner
Why it matters: a rushed admission puts a name on the letterhead before ICAI knows. Do not call anyone a partner on letterheads or the website until the admission is complete. Regulation 190(7) requires the firm to tell ICAI of any change in its registered particulars within one month; partner changes are filed through the Self-Service Portal.
Clauses 10 to 12: exits and protection
10. Retirement and expulsion
Why it matters: a payout nobody agreed in advance is the most common reason former partners stop speaking. Any public announcement of a change in partnership must be a bare statement of facts, as the Code of Ethics allows.
11. Death or long illness
Why it matters: this is the clause partners skip because it feels morbid, and the family pays for that later. ICAI's Code says the legal representative of a deceased partner can share in the firm's profits only where the partnership agreement provides for it, for a specified period. Take legal advice on the wording.
12. Restraint, confidentiality, records and disputes
Why it matters: these decide what happens to clients, files, logins and tempers on the day someone leaves. Section 36(2) of the Partnership Act allows partners to agree that an outgoing partner will not carry on a similar business within a specified period or local limits, if the restriction is reasonable. Draft it with your lawyer. A deed can bind a partner; it cannot force a client to stay.
Naming the 12 areas is the start. The real work is the questions under each one, answered in writing and taken to your lawyer and tax adviser. Partner Governance & Succession turns these areas into worksheets and checklists: profit-sharing models compared, capital and drawings rules, retirement and succession, and what happens on a death or a long illness.
ICAI steps when the deed changes
| Event | What to do (as at 20 October 2026) |
|---|---|
| New firm or new firm name | Name approval on the Self-Service Portal (Form 117); then firm particulars within one month of approval or starting practice (Regulation 190(4)) |
| Partner joins, retires or dies | Change request on the Self-Service Portal within one month (Regulation 190(7)); late filing needs condonation (Regulation 190(11)) |
| Merger with another firm | Form MDG 1 within 30 days under ICAI's 2024 merger guidelines (check the current process on the Self-Service Portal); demerger terms must be in the merger agreement |
| Any announcement | A bare statement of facts only |
Each partner who must confirm an ICAI application does so with their own login and OTP. Nobody shares a password or OTP. If you are combining two firms, read our guide on Merger of CA Firms: ICAI Process and When It Makes Sense.
Getting the deed made, and keeping it alive
- Each partner answers the 12 clause areas alone, then all compare in one meeting.
- Agree a one-page summary of the answers and sign it as a working note.
- Give the summary to your lawyer to draft; ask about stamp duty and registration with the Registrar of Firms in your state.
- Ask your tax adviser to review every money clause.
- Check the draft against the ICAI limits above: eligible partners, profit sharing, signing, firm name.
- Sign, file with ICAI on time, and keep the signed deed with the firm's permanent records.
- Read the deed together once a year, and update it when roles, shares or partners change.
A deed covers the legal minimum. Most firms also benefit from a one-page partners' charter: roles, decision rights, the monthly meeting, how disagreements are raised, and the "if I am gone tomorrow" plan. Building that charter, profit models, decision rights and succession is what Partner Governance & Succession walks you through, with worksheets.
Starting out? Our guide on How to Start CA Practice in India: A 6-Month Plan covers the first six months, and How to Grow Your CA Practice: Solo to a 10-Person Firm covers when to add partners. A partnership deed for CA firm partners works only if it says what you really agreed. Start with the free first lesson of Partner Governance & Succession, then read your deed together while it is still an easy conversation.
Rules change: check the latest ICAI announcement before you act.
Questions people ask
Who can be a partner in a CA firm?
Under Clause (4) of Part I of the First Schedule, a CA in practice may enter into partnership only with another chartered accountant in practice, or with members of other professional bodies or persons ICAI has prescribed under its multi-disciplinary partnership rules. A firm can be called a firm of Chartered Accountants only if all partners are CAs in practice.
Is a partnership deed compulsory for a CA firm?
A written deed is the practical way to record what partners agreed, and ICAI's Self-Service Portal processes for firm changes ask for supporting documents. Without a written agreement, the Indian Partnership Act's default rules decide matters such as profit shares. Ask your lawyer what your firm needs.
What happens to a CA firm when a partner dies?
Under the Indian Partnership Act, 1932, a firm is dissolved by the death of a partner unless the partners have agreed otherwise. A continuity clause lets the firm carry on. ICAI's Code allows the legal representative of a deceased partner to share profits only if the agreement provides for it, for a specified period.
Can a CA firm deed stop a retiring partner from taking clients?
The Partnership Act allows partners to agree that an outgoing partner will not carry on a similar business within a specified period or local limits, if the restriction is reasonable. Clients are still free to choose their CA. Draft any such clause with your lawyer.
Do I need to inform ICAI when the deed changes?
Regulation 190(7) requires a member or firm to communicate any change in the particulars registered with ICAI within one month. Adding or removing a partner is filed through the Self-Service Portal. Late filing needs condonation.
Sources
- ICAI, Code of Ethics, 13th edition (2026), Volume I: Clause (2) at 2.14.1.2 and 2.14.1.2(iv); Clause (4) at 2.14.1.4; firm of Chartered Accountants only if all partners are members in practice (section 7 of the CA Act, at 2.4.1); Clause (12) at 2.14.1.12; section 26; 2.14.1.6(iv)A(ii)
- The Chartered Accountants Regulations, 1988, Regulation 190(1), 190(2)(ii)(k), 190(4), 190(7), 190(11) (text as updated to 2013; check the current version)
- ICAI, FAQs on Firms (change in constitution, condonation, merger filings)
- Indian Partnership Act, 1932, sections 13(b), 36(2) and 42(c) (India Code)
- Indian Partnership Act, 1932, bare text as published by the Registrar of Firms and Societies, Madhya Pradesh
- ICAI (Merger and Demerger of CA Firms) Guidelines, 2024, para 5(i) (demerger terms in the merger agreement)
Start with the free first lesson of Partner Governance & Succession and use its checklist to mark the gaps in your deed. Merging with another firm? Merge, Network or Stay Solo covers the merger deed. Both are in the Office plan.
