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Partnership Law Act 2019

Financial reporting, dissolution of partnership, and other miscellaneous provisions - End of partnership - Dissolving a partnership

79: Right of outgoing partner or partner’s estate to share profits or obtain interest

You could also call this:

“What happens to your share when you leave or die in a business partnership”

When a partner leaves a business partnership or dies, this law explains what happens if the remaining partners keep running the business without settling accounts with the leaving partner or their estate. You have two choices in this situation. You can either get a share of the profits that the court decides came from using your part of the business assets, or you can get 5% interest per year on the value of your share in the business. However, if you have a different agreement in place, these options might not apply. This law also mentions that there’s another section (section 80) that has more information about this topic.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206099.

Topics:
Business > Industry rules Money and consumer rights > Banking and loans
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78: Rights where partnership dissolved for fraud or misrepresentation, or

"What happens if someone lied to you when you joined a business partnership"

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80: Option to purchase share of outgoing or deceased partner, or

"Rules for buying a partner's share when they leave or die"

Part 4 Financial reporting, dissolution of partnership, and other miscellaneous provisions
End of partnership: Dissolving a partnership

79Right of outgoing partner or partner’s estate to share profits or obtain interest

  1. This section and section 80 apply if—

  2. a member of a firm (A) dies or otherwise ceases to be a partner; and
    1. the surviving or continuing partners carry on the business of the firm with its capital or assets without any final settlement of accounts as between the firm and A or A’s estate.

      1. A or A’s estate is entitled, at the option of A or A’s personal representative, to—

      2. a share of the profits that are made after the dissolution of the partnership and that the court finds to be attributable to the use of A’s share of the partnership assets; or
        1. interest at the rate of 5% per year on the amount of A’s share of the partnership assets.

          1. Subsection (2) does not apply if there is an agreement to the contrary.

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