What to consider if your business partnership is coming to an end

A partnership will be dissolved if the following events occur:

1. All of the partners agree to dissolve the partnership;
2. One partner provides written notice to the other partners of their intention to dissolve the partnership;
3. If a Court orders the dissolution of the partnership;
4. If a partner is no longer legally allowed to own the business, the subject of the partnership;
5. If a partner passes away;
6. If a partner becomes bankrupt;
7. If the partnership expires pursuant to the partnership agreement.

Some considerations for partners in a partnership that is coming to an end are:

1. If the business is to continue, what new business structure will replace the partnership?
2. How will the interests of the partners be valued and distributed or sold?
3. Have the partnership books, outstanding tax returns and BAS statements been completed and filed?
4. Does the partnership have any outstanding obligations to third parties such as employees, debtors, creditors or government authorities?

It is important to ensure that these considerations, and any others that may be relevant, are satisfactorily addressed. Partners can be held personally liable for any outstanding obligations that exist after a partnership has come to an end.

We encourage any partners in this situation to seek legal advice to ensure that they will not be personally pursued after their partnership has come to an end.

If you have further questions, please contact us at frank@franklaw.com.au.

This is not legal advice.