A general partnership or limited partnership is dissolved by resolution of the partners, upon expiry of a term, upon attainment of the objective or by compulsory judicial decision.
In general the dissolution of a general partnership or limited partnership consists of three key stages:
- Adoption and submission of a dissolution resolution
- Liquidation
- Deletion of the company from the Commercial Register
Dissolution resolution and submission of dissolution resolution
The basis for dissolution of a general partnership or limited partnership is the resolution of its partners, for which over 3/4 of the shareholders vote in favour, unless the articles of association stipulates a larger majority. If the dissolution of a general partnership or limited partnership is set forth in the partnership agreement, or the general partnership or limited partnership is to be dissolved after the expiry of a term or upon attainment of an objective, the partners may decide to continue the activities of the partnership or merger, division or transformation of the partnership.
The partnership agreement can also specify that the partnership agreement is terminated upon departure of a partner from the partnership, the bankruptcy of the owner, or the death of a partner who is a FIE or the dissolution of a partner who is a legal person.
To dissolve the company, submit to the Commercial Register a joint application by the partners along with the minutes of the meeting of partnership members.
Entry of a successor into a general partnership or limited partnership
In the event of the death of the partner the partner’s successors have the right to join the general partnership or limited partnership if this is provided for in the partnership agreement or if all partners consent to this. If the successor does not wish to join the partnership or if the partners do not consent to it, the successor shall have the right to receive compensation in a part proportional to his or her share of the estate. The successor may submit an application for joining the general partnership or limited partnership within three months of learning of the right of succession.
Liquidation
The decision to dissolve a general or limited partnership and the submission of an application to the business register is followed by liquidation.
The liquidators are usually the partners, unless otherwise stipulated in the articles of association or by a decision of the partners. The liquidator must have consented to being appointed liquidator.
Stages of liquidation:
- Appointment of liquidators and entry of the dissolution and liquidators in the business register.
- Publication of the notice of liquidation proceedings in Ametlikud Teadaanded.
- Preparation and approval of the liquidation report by decision of the partners. The liquidation report is submitted to the business register immediately after approval.
- Selling the assets of the partnership, collecting debts, and satisfying the claims of creditors.
- Preparation of the final report of the liquidation and distribution of assets between partners.
- Submitting an application for the deletion of the partnership from the business register to the registrar.
If the assets of the general partnership are not sufficient to satisfy the claims of the creditors, the partners of the partnership are responsible for the obligations of the partnership in proportion to the size of their contributions, unless otherwise stipulated by the partnership agreement.
If a partner in a limited partnership has paid their contribution to the limited partnership in full, they are not liable for the obligations of the limited partnership. If a partner in a limited partnership has not paid the contribution in full, they are liable for the obligations of the limited partnership to the extent of the unpaid amount of the contribution.
If it is not possible to collect the unpaid amount from the partners and therefore satisfy the claims of the creditors, the liquidators must submit a bankruptcy petition to the county court.
After the claims of the creditors are satisfied, the liquidators distribute the remaining assets among the partners in accordance with the contributions of the partners, unless otherwise stipulated by the partnership agreement.
The time required for the liquidation of a general and limited partnership is not strictly defined and depends, above all, on the particularities of the partnership and the smoothness of cooperation between the various parties involved in the liquidation.
If the dissolution of the partnership is stipulated by the partnership agreement or if the partnership is dissolved upon the expiration of the term or the achievement of the objective, the partners may decide to continue the activities of the partnership or carry out a merger, division, or transformation of the partnership. The partners must submit a joint application to the business register to enter the continuation of the activities of the partnership in the business register.
In the case of a general partnership, the partners may decide to dissolve the partnership without liquidation proceedings, but this does not release the partnership from the obligation to satisfy the claims of the creditors.
Deletion from the Commercial Register
After the general partnership or limited partnership has been liquidated as required, you must submit an application to the Commercial Register for the deletion of the company from the Commercial Register. You will also have to attach a final liquidation report to the application. Deletion from the Commercial Register is free of charge.
An association deleted from the commercial register shall preserve its documents. The documents are deposited with a liquidator or with a person assigned by the partners or with an archive. A notation is made to the register indicating the depositary of the documents.