What should you do if you wish to stop running a partnership? If you have the intention of ending your partnership due to various factor, but you have no idea about the right way of dealing with the process, feel free to contact a corporate secretarial firm in Singapore. You need to comply with Partnership Act 1961 when ending your partnership, and you should ask help from the professionals.
The partners or owners can dissolve the partnership for a lot of reasons, and some of the reasons include expulsion, resignation, retirement, withdrawal or death of a partner. Besides, mental or physical disability of a partner can be one of the reasons for the partnership to come to an end. If the partners have agreed on the dissolution of the partnership, the business may be ended too.
The partnership may also dissolve when it has filed for bankruptcy or when the authorities found out that the partnership business (Also see Poor Accounting Practices That Business Owners Should Avoid) is illegal. The partners should terminate the business if the Court has issued an order which states that the partnership must be stopped. This may be because the partnership is not able to reach its economic objectives anymore.
Another reason for the dissolution of a partnership would be one, or some of the partners have caused extreme difficulties or made it impossible for the business to maintain its operation. If one of the partners have bought out all the other partners, then the business (Also see Accounting Principles: Business entity concept) will cease being a partnership, and it will continue to operate as a sole proprietorship.
Section 37 of the Partnership Act is the one that governs the dissolution of partnerships by the Court. If a partner applies for the dissolution, the Court may order the partnership to be ended in several situations. The first situation would be when a partner has gone insane or has shown to be having unsound mind permanently to the satisfaction of Court. In both the cases, the persons who can make the application on behalf of the individual are the committee, his next friend, or an individual who has the designation to intercede this matter just like other partners.
The second situation is when a partner lost the ability to perform his responsibilities as one of the partners in the partnership permanently. Besides, the Court may order the dissolution when a partner has committed an offence, and the Court thinks that this will have an impact on the carrying on of the partnership after considering the nature of the business. The dissolution of partnership can also happen when one of the partners contravene the partnership agreement continuously or intentionally. He might also involve himself in the events relevant to the business (Also see Ways to Increase Your Business Revenue) which has made it impractical for other partners to continue running the business (Also see Mistakes That You Should Avoid When You Start Running a Business).
It would be good practice for the partners to decide in advance on the actions they will take if the withdrawal or death of one more partner happens. To achieve this, they may include the terms into the agreements that are related to buyouts. Some partnerships may include it in the partnership agreement, but having another agreement about this issue would be fine too.