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 lists the 12 clauses to settle together before the lawyer drafts, and 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
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. So record each partner's membership number and certificate of practice. A CA employed by your firm is not a partner, however senior.
2. The firm name
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. Write who keeps the name if the firm splits.
3. Start date, duration and continuity
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 saying the firm carries on with the remaining partners protects clients, staff and the firm's ICAI history. Also say whether the partnership is at will or for a fixed term.
Clauses 4 to 6: money
4. Capital and current accounts
How much each partner brings, and when. Whether capital earns interest. How each partner's capital account and current account are kept, and over what period capital is returned when someone leaves.
5. Profit sharing
Section 13(b) of the Partnership Act says partners share profits equally unless they agree otherwise. Pick a model on purpose:
| Model | Good when | Risk |
|---|---|---|
| Equal shares | Partners bring similar work and effort | Resentment when effort differs |
| Fixed plus variable | Partners have different roles or hours | Arguments over the fixed part |
| Lockstep or points | Building a long-term firm with younger partners | Strong performers may feel held back |
| Based on own clients | A loose combination, early on | No real firm ever forms |
Write a review date, say two years out. 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
How much each partner may draw each month, what happens in lean months, and when drawings are squared up against actual profit.
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
Who is the head office in-charge on ICAI's records. Who signs which reports, and who handles quality, independence, billing and staff. 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
List the decisions that need every partner (a new partner, a new office, borrowing, a merger, large spending) and those a majority or the managing partner can take. Add a monthly partners' meeting with minutes. A written decision matrix prevents a lot of quiet resentment. A ready decision-rights sheet comes with the Partner Governance course.
9. Admitting a new partner
How a new partner is chosen and admitted, on what capital and share, and whether there is a trial period before admission. 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
At what age, or after what notice, a partner may retire. What is paid to a retiring partner, for goodwill and capital, and over how many years. Whether a partner can be asked to leave, for what reasons and by what process. 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
This is the clause partners skip because it feels morbid. 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. Without a clear clause, the deed may not settle what the continuing firm owes the deceased partner's family; take legal advice on the wording. Also define incapacity: after how many months of illness, decided by whom, and what share the partner gets meanwhile.
12. Restraint, confidentiality, records and disputes
- Restraint: 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.
- Confidentiality: client information stays confidential after a partner leaves.
- Records: who keeps working papers, software licences, email accounts and the firm's DSC arrangements.
- Disputes: talk first, then a named facilitator, then mediation, then arbitration.
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 2025 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; the merger deed and the ICAI forms are covered in Merge, Network or Stay Solo.
Getting the deed made, and keeping it alive
- Each partner answers the 12 clauses 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.
