Published
1994-04-30
Keywords
- personal partnership,
- partner,
- corporate law,
- withdrawal
Abstract
A partner may withdraw from a partnership or demand its dissolution for reasons that do not have to be at all the fault of the other partners, and may also exercise his or her right if he or she has himself or herself, through his or her own culpable behaviour, contributed to a crisis of trust between the partners.
In any partnership, which is based on the personal trust and close cooperation of the partners, it would be difficult to realise its objectives if one of the partners had to - against his or her will - remain in the partnership (even over a regular notice period), even though there were compelling reasons for his or her resignation. Thus, by giving a shareholder in concreto the right to withdraw from the partnership for a valid reason, it is recognised that his or her interest in the given situation must be given priority over that of the partnership.
A valid reason for the exclusion of a partner of a general partnership cannot be the request of the partner to dissolve the partnership made to a court alone. If the partner demanding the dissolution of the partnership is not a nuisance to the other partners and the reasons for demanding the dissolution of the partnership are subjectively valid only for him or her and the other partners are not disturbed (e.g. the other partners are “only” causing the dissolution of the marriage of the partner demanding the dissolution of the partnership), in such a situation the other partners do not have grounds to file a counterclaim requesting to exclude the partner from the partnership.
Since the act does not differentiate “important reasons” and seems to provide the partner with the same, extremely powerful weapon in each case, the teleological interpretation of Article 118 of the Commercial Code should lead to a conclusion that - if the same effect can be achieved at a lower cost without anyhow violating the interests of the partner wishing to withdraw from the partnership, nor the interests of the remaining partners who wish that the partnership continues to exist between them, then there are no reasons not to decide that even if the partnership agreements does not provide for the right to withdraw from the partnership because of an important reason, while special general circumstances or the protection of interests of the partner who has subjectively important reasons for withdrawing from the partnership do not support the withdrawal - the remaining partners (if they wish to continue the partnership between them) should be able to prevent a verdict dissolving the company by paying the due amount to the partner wishing to dissolve the partnership.
A partner of a general partnership has the right to withdraw from the general partnership (limited partnership) for valid reasons when the legitimate interests of the parties do not support a request for dissolution.
For example, a provision in the articles of association (or a subsequent resolution of the partners) stating that “a partner of a general (limited) partnership who wishes to withdraw from the partnership for a valid reason, who has no legal interest in seeking the dissolution of the partnership shall (without the right to request the dissolution of the partnership) be repaid by the remaining partners in an amount not smaller than would have been the case if the partnership had been dissolved” is permissible. Obviously, in the event of a dispute between the partners, the court would examine whether the prerequisites for “forcing” a partner to resign from the partnership and accept repayment in lieu of seeking dissolution of the partnership for a valid reason were met.
Nothing prevents the option of the general partners to specify “valid reasons” entitling them to withdraw from the partnership in the articles of association (or in a subsequent resolution). Such a regulation, if it does not generally exclude the right to leave the partnership for a valid reason, does not need to be invalid in and by itself. However, acknowledging that the regulation of “valid reasons” by the shareholders as absolutely binding could lead to an unacceptable limitation of the statutory right to withdraw from the partnership (to request its dissolution). Therefore, such a verdict will not be binding for a court deciding in a dispute between the partnership (the other partners) and the partner who, for valid reasons, wishes to withdraw from the partnership or demands its dissolution.
The purpose of Article 869 § 1 of the Civil Code and Article 116 § 1 of the Commercial Code is the protection of the partners against unforeseeable in terms of time, binding with the partnership.
If the invalid provisions of the partnership are insignificant for cooperation of the partners - it should be deemed that such provisions do not render the entire articles of association of the partnership invalid. The court deciding in a dispute between the partners, regarding the contents of the stipulations of articles of association, decides in such cases:
- whether the invalid provisions of the articles are replaced by the dispositive provisions of the Act;
- or whether the solution closest to the will of the partners and still permissible under the current law should be adopted according to a supplementary interpretation of the articles.
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