Partnerships | By Lawyers
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Partnerships

This publication guides practitioners through the creation, management, and dissolution of partnerships.

1 Matter Plan

Overview

The commentary covers key aspects of partnerships, including structures, formation, privacy, and liability. It also offers guidance on flexibility, income and taxation, participation arrangements, raising capital, and decision-making.

The Reference materials folder includes guidance on electronic signing and remote witnessing, and the Getting the matter underway folder contains essential compliance and client engagement documents. The comprehensive Retainer Instructions ensure that all necessary information is gathered from the client at the outset of the matter.

The Business structures and the comparative table guide provides a comparison of the pros and cons of different business structures.

Precedents in this publication include:

  • Library of clauses for partnership agreements;
  • Agreements and deeds for:
    • Partnerships;
    • Limited partnerships;
    • Put and call options;
    • Assignment;
    • Dissolution;
  • Put and call funding arrangement explanations.
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1 Matter Plan Included

  • Item icon ALERTS - Nil
  • Item icon Full Commentary - Partnerships
  • Folder icon Reference materials
    • Item icon AI Prompts
    • Item icon Electronic Signing and Witnessing
    • Item icon Business Structures and the Comparative Table
    • Item icon Further information
  • Item icon Overview
    A partnership is an unincorporated business structure that allows 2 or more parties to join together in business with the intention of making a profit. The partners have a contractual, fiduciary relationship based on good faith.

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  • Folder icon A. Getting the matter underway
    • Item icon File cover sheet - Partnerships
    • Item icon To do list - Partnerships
    • Item icon First steps
    • Item icon Client details and verifying identity
    • Item icon Taking instructions in partnership matters
      Written partnership agreements cover:

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    • Item icon Retainer instructions - Partnerships
    • Item icon Conflict of interest check
    • Item icon Initial letter to client with Client Care and Terms of Engagement
    • Item icon Client Care and Terms of Engagement
    • Item icon Scope of work - Partnerships
    • Item icon Time and costs estimates
    • Folder icon If required - Updating costs disclosure
      • Item icon Letter to client updating costs estimate
    • Folder icon General deeds, agreements, execution clauses and statutory declaration
      • Item icon Deeds and Agreements
      • Folder icon Deeds
        • Item icon Deed for general use
        • Item icon Deed of guarantee
        • Item icon Deed of release
        • Item icon Confidentiality deed
        • Item icon General deed of indemnity
        • Item icon Deed of assignment of agreement
        • Item icon Deed of gift
      • Folder icon Agreements
        • Item icon Agreement for general use
        • Item icon Heads of agreement
        • Item icon Non-disclosure agreement - Formal
        • Item icon Non-disclosure agreement - Informal
      • Folder icon Library of clauses for deeds and agreements
        • Item icon Amendment clause
        • Item icon Confidentiality clause for defined information - All parties
        • Item icon Confidentiality clause for defined information - One party
        • Item icon Confidentiality clause for terms of agreement - All parties
        • Item icon Confidentiality clause for terms of agreement - One party
        • Item icon Costs clause
        • Item icon Counterparts clause
        • Item icon Dispute resolution clause
        • Item icon Events beyond control clause
        • Item icon Governing law and jurisdiction clause
        • Item icon Interpretation clause
        • Item icon No assignment clause
        • Item icon Notices clause
        • Item icon Severance clause
        • Item icon Waiver clause
        • Item icon Whole agreement clause
      • Folder icon Execution clauses
        • Item icon Execution clauses - Agreements
        • Item icon Execution clauses - Deeds
      • Folder icon Statutory declaration
        • Item icon Statutory declaration
        • Item icon Standard annexure note for documents
  • Folder icon B. The partnership structure
    • Item icon The partnership structure
      Generally, a partnership involves 2 or more parties:

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    • Item icon Determining whether a partnership exists
      Legislation and case law together provide rules that help determine whether a partnership exists. Partnership is defined in s 8(1) of the Partnership Law Act 2019 as:

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    • Item icon Relationship between the partners
      The partner relationship is a fiduciary one. Each partner is an agent of the other partners. When acting in the partnership business, their actions bind the other partners. Therefore, partners are expected to:

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    • Item icon Relationship of partners to third parties
      The Partnership Law Act 2019 sets out the following key aspects of relations between a firm’s partners and third parties:

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    • Item icon Partnership property
      Section 36 of the Partnership Law Act 2019 defines partnership property as property originally brought into the partnership or acquired for the firm’s business purposes. Partnerships generally lack an independent legal personality, so partnership property is held by the partners personally, ...

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    • Item icon Apportionment of liability
      General partners and limited partners have different liability for the partnership’s debts and obligations, and other partners’ actions.

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    • Item icon Taxation and superannuation
      Partnerships do not pay income tax on their profits. The firm’s profit or loss is shared equally between the partners unless the partnership agreement says otherwise. Each partner then:

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  • Folder icon C. Establishing a partnership
    • Item icon Establishing a partnership
      There are no strict requirements applicable to forming a partnership. It can be formed by the partners:

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    • Item icon Eligibility as a partner
      Capacity to enter into a partnership is governed by the general law of contract. This means the general rules relating to a person’s capacity to enter into a contract apply. It follows that a person may not be eligible as a partner if they are:

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    • Item icon Succession planning
      Succession arrangements address dispute resolution and minimal disruption to business operations caused by a partner’s permanent injury, retirement, divorce, bankruptcy, expulsion, or death. These arrangements provide a course of action for the remaining partners to follow when those events occur ...

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    • Item icon Partnership agreement
      A written agreement is not essential for a partnership to exist. The agreement can be oral or implied. However, a written agreement is best practice. Partnership agreements that effect a transfer of interests in real property must be in writing.

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    • Item icon Partnership agreement
    • Item icon Limited partnership agreement
    • Folder icon Library of clauses for partnership agreements
      • Item icon Clause - Representative clause for corporate partner
      • Item icon Clause - Managing partner
    • Item icon Steps to registering a limited partnership – New Zealand Companies Office
    • Item icon AI Prompt for Letter to client with advice on partnership agreement
    • Item icon Letter to client with draft partnership agreement
  • Folder icon D. Running a partnership
    • Item icon Duty to account to partners
      All partnership records must be reasonably available for inspection and copying by every partner: s 52 of the Partnership Law Act 2019. Partners have a duty to account to each other for:

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    • Item icon Companies Register – New Zealand Companies Office
    • Folder icon If required - Miscellaneous forms and documents
      • Item icon Letter to partner with notice of general partnership meeting
      • Item icon Minutes of partnership meeting
      • Item icon Policy register
      • Item icon Consent of general partner
      • Item icon Deed of variation of partnership as to profit share
      • Item icon Other entity additional limited partner information - private
      • Item icon Other entity additional general partner information - private
      • Item icon Other entity additional general partner information - public
    • Folder icon If required - General power of attorney
      • Item icon General power of attorney
    • Folder icon If required - Put and call options
      • Item icon Put and call option agreement
      • Item icon Put and call option funding agreement
      • Item icon Letter to client with draft put and call option and funding agreements
      • Item icon Enclosure - Explanation of put and call option agreements and funding agreements
    • Folder icon If required - Library of precedents for small business clients
      • Item icon Agreement for supply of goods and services
      • Item icon Credit application
      • Item icon Dispatch and delivery policy
      • Item icon Example tax invoice
      • Item icon Liability waiver and consent
      • Item icon Privacy policy
      • Item icon Returns and refund policy
      • Item icon Terms of trade
      • Item icon Website terms of use for advertising and booking personal services
      • Item icon Website terms of use for downloadable online products
      • Item icon Website terms of use for physical products
  • Folder icon E. Dissolution
    • Item icon Events that trigger dissolution
      Under the Partnership Law Act 2019, triggering events include:

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    • Item icon Fixed-term partnerships
      If a fixed-term partnership continues after the term has ended and there is no new express agreement the partners’ rights and duties remain unchanged. However, the partnership becomes dissolvable at will: see s 68.

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    • Item icon Letter to partner with notice of general partnership meeting
    • Item icon Minutes of partnership meeting
    • Item icon Technical dissolution – Reconstitution and new partners
      A dissolution that does not stop a partnership from operating is known as a technical dissolution. The outgoing partner may assign their partnership interest to the existing partners or a new partner. A partner’s retirement or new partner’s admission constitutes a legal dissolution of the previous ...

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    • Item icon Letter to partner with notice of retirement or resignation
    • Item icon Deed of assignment of interest in a partnership
    • Item icon Agreement for admission of incoming partner
    • Item icon Letter to partner with notice of admission of new partner
    • Item icon Deed of dissolution
      A deed of dissolution can be a valuable tool for terminating a partnership. However, it is not required if contained in the partnership agreement. A deed of dissolution covers:

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    • Item icon Winding up
      When the partners decide to wind up the partnership, the partnership assets must be sold and any debts and tax liabilities settled before the remaining proceeds are distributed to the partners. The partnership also must submit a final partnership tax return from the beginning of the income year up ...

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    • Item icon Letter to partner with notice of intention to dissolve the partnership
    • Item icon Deed of dissolution
    • Folder icon Library of clauses for termination
      • Item icon Clause - Termination of partnership
      • Item icon Clause - Notice of termination of partnership
    • Item icon Letter to client with draft deed or agreement
    • Folder icon If required - Other partnership forms
      • Item icon Request to deregister a limited partnership
      • Item icon Application for restoration of a limited partnership
      • Item icon Other entity additional limited partner information - private
      • Item icon Other entity additional general partner information - private
      • Item icon Consent of general partner
      • Item icon Other entity additional general partner information - public
  • Folder icon F. Dispute resolution
    • Item icon Dispute resolution
      Disputes between partners can arise for various reasons, including:

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    • Item icon Letter to partner with notice of a partnership dispute
    • Item icon Potential reasons for expulsion
      A partner may be expelled from the partnership if the partner:

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    • Item icon Letter to partner with notice of expulsion from partnership
  • Folder icon G. Finalising the matter
    • Item icon Finalising the matter
      Closing the file

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    • Item icon Letter to client finalising the matter
    • Item icon Example invoice
    • Item icon Invoice recital - Partnerships
    • Item icon Closing the file
    • Item icon File closing checklist
  • Item icon Comments and suggestions for By Lawyers

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