Dissolve a partnership

Ending a partnership

Any partner can – subject to any agreement that's in place – end the partnership and effectively bring the business to a close.

Partnerships may be dissolved when:

• the term of the partnership has expired
• one partner has given notice to the other partner(s)
• the partnership is now illegal – for example, one partner can no longer legally own a business
• there is a court order
• there is a death of a partner – or the business has gone bankrupt.

When a partnership is dissolved or a partner retires, according to S41 of the Partnership Act 1958, a notice must be placed in a Government Gazette and in at least one newspaper circulating in each district in which the business operates.

If the notice is not signed by the remaining partner(s), the exiting/retiring partner will continue to be at risk of being sued for debts and defaults of the remaining partner(s) after the dissolution.

In the absence of a written agreement, S48 of the Partnership Act 1958 sets out the rules on how the assets of the business are to be disposed of.

Ending a limited partnership

There's a different process for ending a limited partnership.

To end a limited partnership, you need to notify Consumer Affairs Victoria (CAV), as well as fill out the notice of dissolution or cessation of a limited partnership form within seven days of ending a limited partnership.

There are three ways a limited partnership can end:

1. Changing from being a limited partnership

A limited partnership can be ended only when it has no more limited partners. This means all limited partners take on unlimited liability – or leave the partnership.

It also requires all the partners to agree to change the business from being a limited partnership to a partnership in which all partners equally share in the management and liabilities of the business.

2. Dissolving a limited partnership

Subject to the terms of the partnership agreement, there are certain restrictions when dissolving a limited partnership.

A limited partner cannot dissolve a limited partnership by issuing a notice on their own. The general partner(s) – or the other limited partner(s) – cannot dissolve a limited partnership on the basis that the limited partner:

• has allowed their share of the partnership property to be used as collateral (charged for) debts outside of the partnership
• has died
• has become bankrupt
• has retired
• is a body corporate and has become dissolved.

3. Winding 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.

Want to know more?

For more information on dissolution of a limited partnership, visit Consumer Affairs Victoria or call 1300 55 81 81.