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Partnership Law Act 2019

Relationship of partners to third persons and to each other - Relationship of partners to one another

57: Rights of assignee of share in partnership

You could also call this:

"Understanding what happens when a partner gives their share to someone else"

When a partner in a partnership gives their share to someone else, either completely or as a kind of loan, there are some rules about what the new person can and can't do.

If the partnership is still going, the new person can only get the share of the profits that the original partner would have gotten. The new person has to agree with how the partners decide to split up the profits.

The new person isn't allowed to get involved in running the partnership business. They can't ask to see the partnership's records or ask for details about what the partnership is doing.

If the partnership ends, either for everyone or just for the partner who gave away their share, then the new person can get their share of what's left of the partnership. They can also ask for information about how that share was worked out, but only from the date when the partnership ended.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206057.

Topics:
Business > Industry rules
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Part 3Relationship of partners to third persons and to each other
Relationship of partners to one another

57Rights of assignee of share in partnership

  1. This section applies if a partner assigns the partner’s share in the partnership (either absolutely or by way of mortgage).

  2. While the partnership continues, the assignment entitles the assignee only to receive the share of the profits to which the assigning partner would otherwise be entitled.

  3. For the purposes of subsection (2), the assignee must accept the account of profits agreed to by the partners.

  4. The assignment does not, as against the other partners, entitle the assignee, while the partnership continues, to—

  5. interfere in the management or administration of the partnership business or affairs; or
    1. require an account of the partnership transactions; or
      1. inspect the partnership’s records.

        1. If the partnership is dissolved (whether with respect to all the partners or with respect to the assigning partner), the assignee is entitled—

        2. to receive the share of the partnership assets to which the assigning partner is entitled as between the assigning partner and the other partners; and
          1. to an account as from the date on which the partnership is dissolved (for the purpose of ascertaining that share).

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