Last Updated February 1, 2024
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What is a Notice of Withdrawal from Partnership?
A Notice of Withdrawal from Partnership is used to formally notify a partnership that one of the partners is ending their involvement. The notice informs all the parties which partner is withdrawing and the date it will take effect.
There are two types of withdrawals:
Voluntary withdrawal occurs when a partner exits a partnership of their own free will. For example, retirement is a common reason for using this type of withdrawal.
Involuntary withdrawal occurs when the partners vote to expel one of the partners from the partnership in accordance with the provisions of the partnership agreement. In this case, the remaining partners jointly service notice. Some common reasons for this type of withdrawal can include death, incapacity, incompetence, or a partner’s criminal conviction.
A Notice of Withdrawal from Partnership is also known as a:
- Partnership Withdrawal
- Partnership Withdrawal Letter
- Partnership Withdrawal Agreement
- Partnership Dissolution Agreement
What happens when a partner leaves a partnership?
The result of a partner withdrawing from a partnership depends on the details in the Partnership Agreement. It will likely outline how much notice the partnership needs to receive and whether the partnership dissolves as a result. If only one partner is remaining, the partnership automatically dissolves.
Each of Canada’s provinces and territories has its own Partnership Act. The default position under these laws is that if a partner leaves for any reason, the partnership must dissolve.
The withdrawing partner is also entitled to their share of the partnership’s assets.
If the partnership agreement doesn’t specify what happens when a partner leaves, the remaining partners will be bound by the applicable Partnership Act to dissolve the partnership whether they want to or not. When a partnership dissolves, its affairs must be wound up, assets liquidated, debts paid, and the partners divide the surplus equally or by whatever alternative method has been agreed between the partners.
In this scenario, the remaining partners would have to create a new general partnership if they wished to continue with the business.
How do I write a Notice of Withdrawal from Partnership?
LawDepot's Notice of Withdrawal from Partnership template allows you to customize a document specifically for your needs and guides you through the process.
1. State who is leaving the partnership
Start your Notice of Withdrawal from Partnership by stating who is giving notice to the partnership.
If you’re the withdrawing partner, select “partner leaving” in the questionnaire.
Select "remaining partners" if you're part of the group that isn't leaving the partnership. Some reasons for serving notice on another partner's behalf include:
- The partner has died (notice will be served on the deceased’s estate)
- Incapacity of the partner
- Disability of a partner
- Incompetence
- Breach of fiduciary duty (legal obligations)
- Criminal conviction
- Operation of law
- Legal judgment
2. Provide your location
Each province has its own laws that govern partnerships. Specify the region your company operates in, and LawDepot will customize your Notice of Withdrawal From Partnership to meet your province's laws.
For more information on your province or territory’s Partnership Act, see the links below:
3. Include the partnership’s and the withdrawing partner’s details
Provide the partnership’s basic details in your withdrawal notice. This includes the partnership’s name and purpose, the date it was established, and the names of the remaining partners.
You'll also need to specify which partner is withdrawing from the partnership by stating their name, address and whether the partner is an individual or business entity.
4. Provide details about the withdrawal
Next, you'll need to indicate when the partner will be withdrawing from the partnership. You can either provide an exact date or the amount of notice the partnership is receiving (e.g., two weeks, 90 days, six months, etc.).
5. Describe any additional clauses
If any additional clauses are relevant to the partner's withdrawal, be sure to include them in the notice. Review your Partnership Agreement if you're unsure whether any clauses need mentioning.
6. Specify the signing details
Sign and date your Notice of Withdrawal from Partnership after reviewing it. Witnesses aren't typically required for a withdrawal notice. However, if you choose to include them, they should be adults capable of understanding the witnessing process and who has no conflicts of interest.
