Agreement between Retiring Partner and Remaining Partners to Dissolve and Wind up Partnership with Mutual Conveyances of Assets
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FAQ
The test of good faith as required for expulsion as stated under Section 33(1) includes three aspects. The expulsion must be in the best interest of the partnership. The partner that is to be expelled must be served with a notice. The partner has to be given the opportunity of being heard.
On retirement of a partner : On retirement of the partner the partnership the partnership firm gets dissolved to form new partnership deed and form new partnership.
If it's a business partnership with two partners, the exit of one partner will result in the collapse of the partnership. The exit terms will be detailed in the partnership agreement which is a legally binding document signed by all participating partners when entering a partnership.
On retirement of the partner, the reconstituted firm continues and the retiring partner is to be paid his dues in terms of Section 37 of the Partnership Act. In case of dissolution, accounts have to be settled and distributed as per the mode prescribed in Section 48 of the Partnership Act.
A Deed of Retirement from Partnership is an Agreement entered into between the Retiring Partner (the Partner who intends to leave the Partnership) and the Continuing Partners (the Partners who will continue to work as Partners of the existing Firm with updated terms).
A Partnership Dissolution Agreement is an agreement between two or more partners to end a business partnership. Signing a Partnership Dissolution Agreement will not immediately end the partnership.
The retirement of a partner extinguishes his interest in the Partnership firm and this leads to dissolution of the firm or reconstitution of the Partnership. A partner, who goes out of a firm, is called retiring partner or outgoing partner.
On retirement of the partner, the reconstituted firm continues and the retiring partner is to be paid his dues in terms of Section 37 of the Partnership Act. In case of dissolution, accounts have to be settled and distributed as per the mode prescribed in Section 48 of the Partnership Act.