Q&As

Can a two-party partnership avoid technical dissolution upon the death of one of the partners (Partner A) by appointing a specified third party as a 'silent partner' with no liability, no voting rights and no rights to capital/income, with a provision that on Partner A's death, their rights/liabilities would pass to the specified third party?

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Published on LexisPSL on 18/03/2020

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • Can a two-party partnership avoid technical dissolution upon the death of one of the partners (Partner A) by appointing a specified third party as a 'silent partner' with no liability, no voting rights and no rights to capital/income, with a provision that on Partner A's death, their rights/liabilities would pass to the specified third party?

We refer to Q&A: Can a two-partner general partnership continue after the death of a partner if the partnership agreement provides for the deceased partner’s interest to automatically vest in another party to the partnership agreement? which sets out details on the more usual method of ensuring the continuation of a partnership following the death of one of its partners which results in it having only one remaining partner. In such a case, the partnership agreement can provide that a new partnership is formed between the remaining partner and a specified third party and give the parties the power to acquire the assets of the dissolved partnership on whatever terms are agreed. Links to precedents are provided in the above mentioned Q&A.

Section 33 of the Partnership Act 1890 (PA 1890) provides that when the composition of a partnership changes by the death of

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