There are different processes for ending a general partnership or a limited partnership.
Ending a general partnership
Depending on your agreement, usually any partner can end the partnership and effectively bring the business to a close.
Partnerships can be dissolved in the following situations:
- The term of the partnership has expired.
- One partner has given notice to the other partners.
- One partner can no longer legally own a business (making the partnership illegal).
- There is a court order to dissolve the business.
- A partner has died.
- The business has gone bankrupt.
Under section 41 of the Partnership Act 1958, when a partnership is dissolved or a partner retires, a notice must be placed in a Government Gazette and in at least one newspaper circulating in each district in which the business operates.
All partners must agree
All remaining partners must sign the notice. If not, the exiting partner risks being sued for the debts and defaults of the remaining partners even after the partnership is dissolved.
If you don't have a written agreement, section 48 of the Act sets out the rules on how the assets of the business are to be disposed of.
Ending a limited partnership
You can end a limited partnership in 3 ways, depending on your situation.
Change to a general partnership
A limited partnership can end when it has no more limited partners. If the only partners left are general partners with unlimited liability, they must either:
- agree to change to a general partnership, or
- leave the partnership.
In a general partnership, all partners equally share in the management and liabilities of the business.
Dissolve a limited partnership
You can dissolve a limited partnership in a way that's in line with the terms of your partnership agreement.
Subject to the terms of the partnership agreement, there are restrictions when dissolving a limited partnership.
A limited partner cannot dissolve a limited partnership by issuing a notice on their own. Also, the other partners cannot dissolve a limited partnership on the following grounds:
- The limited partner has used their share of the partnership property as collateral for debts outside the partnership.
- The limited partner has retired, become bankrupt or died.
- The limited partner is a body corporate and has become dissolved.
Wind up a limited partnership
When the partners agree to wind up a limited partnership, it must be carried out by the general partners, unless a court or tribunal orders differently.
Notify Consumer Affairs
In each of these ways, you must notify Consumer Affairs Victoria (CAV) within 7 days of ending the partnership.
You can find the Notice of dissolution form on the CAV website.
For more information on ending a limited partnership, call CAV on 1300 558 181.