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Partnership Law Act 2019

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

80: Option to purchase share of outgoing or deceased partner

You could also call this:

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

When partners in a business split up or one of them dies, there are rules about what happens to their share. Sometimes, the partners who are still in the business can buy the share of the partner who has left or died. This is called an option to purchase.

If the partners who are still in the business use this option to buy the share, the partner who left (or their family if they died) doesn't get any more money from the business profits. This is different from the usual rule where they might still get some of the profits for a while.

But there's a catch. If a partner tries to use this option but doesn't follow all the important rules about how to do it, they might still have to share some of the profits with the partner who left or their family.

Remember, these rules only apply if the partners agreed to have this option when they first set up their business together.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206100.

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

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

80Option to purchase share of outgoing or deceased partner

  1. Despite section 79, A or A’s estate is not entitled to any further or other share of the profits if,—

  2. under the partnership agreement, the surviving or continuing partners have an option to purchase the interest of a deceased or an outgoing partner; and
    1. the surviving or continuing partners exercise that option.

      1. However, if a partner who is purporting to exercise the option does not, in all material respects, comply with the terms of the option, the partner is liable to account under section 79.

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