Deed of Dissolution of Partnership

What is a deed of dissolution of partnership?

A deed of dissolution of partnership is a key legal document used to formally end a business partnership and record the terms under which the partners agree to separate. This is the first document from which the liquidation procedure starts. The deed of dissolution’s main purpose is to outline a clear legal framework to finalise the business activity. It defines necessary administrative steps to be taken to dissolve the partnership, allocate remaining assets, repay outstanding liabilities and debts and much more.

This deed of dissolution can be used to wind up all types of partnerships in Australia, including general, ordinary and limited partnerships.

When should I use this deed of dissolution of partnership template?

This document can be used for any scenario of a voluntary dissolution of partnerships across Australian states and territories, including:

winding up the partnership once either of the partners becomes bankrupt;

• expiry of the partnership’s term;
• achievement of all partners’ goals;
• illegality of the partnership’s activities;
• mutual decision of all partners;
• unprofitability of the partnership, and more.

Note that the present dissolution deed of partnership cannot be used in situations if the dissolution is ordered by a court.

What should be included in a dissolution of partnership deed template?

A simple deed of dissolution of partnership template Australia must include certain mandatory elements to be a complete and legally binding document.

Partnership Details

The text of the deed should outline the partnership’s name, full business address, the purpose of the partnership and the date of its creation. It is also common to attach a copy of the existing partnership agreement to the text of the present document.

While it is not mandatory, many partners include the exact reason for dissolution in the text of the document.

Dissolution Process

The process of the dissolution outlined in the dissolution deed of partnership should comply with the existing partnership agreement and the relevant state or territory laws. For example, in New South Wales, a notice of the dissolution of a limited partnership must be submitted to the NSW Fair Trading Register, whereas this is not required for ordinary partnerships.

Partners should check applicable state and territory requirements for further information on completion of the dissolution process.

Appointment of Accountant

Following this deed of dissolution, partners must appoint an accountant who should be responsible for the preparation of a statement of account, following the inventory of assets, liabilities and outstanding debts.

An accountant could be one of the partners or any invited third party, such as a professional accountant or an accounting firm, by virtue of a separate service agreement. Once accounting is complete, partners are required to pay off all outstanding liabilities and obligations, such as:

• salaries and wages under existing employment contracts;
• unpaid invoices under ongoing service agreements;
• Australian state or federal taxes, etc.

Distribution of Assets

After all outstanding liabilities are paid, any remaining assets should be distributed between the partners. A template for dissolution of partnership deed may provide either of the following:

• in proportion to each partner’s initial contribution;
• according to each partner’s current share in the partnership;
• in equal shares between all remaining partners; or
• any other arrangement agreed upon by the partners.

Release of Liabilities

It is common for a business partnership dissolution Australia to include a release of liability clause in the text of the deed. In this clause each partner releases each other from any known or unknown liabilities, claims, or demands arising in connection with the operation or dissolution of the partnership.

If this clause is omitted and the deed of dissolution has already been signed, a separate deed of release could be signed afterwards in addition to the present document.

How to customise the template of the deed of dissolution with FasterDraft?

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1. Click the “Create Document” button.
2. Answer simple questions in the form.
3. Select a template’s format – partnership dissolution agreement PDF or Word.
4. Make a payment.

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