Transfer of all rights in partnerships

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The provision of art. 10 of the Commercial Companies Code provides for the possibility of transferring all the rights and obligations of a partner in a partnership, ie general partnership, partnership, limited partnership and limited joint-stock partnership. The consequence of the above is a change in the personal composition of the company, but only through the appearance of the existing partner and replacing him with a new one, and not by expanding the composition of the company with new partners without leaving the company of the existing partners.

The concept of the rights and obligations of partners

Participation in a partnership is associated with the possession of certain rights and obligations. Among the rights, one can distinguish, inter alia, the right to conduct affairs, represent the company or share in profits. Also, the very possibility of transferring all rights and obligations is a right of a corporate partner.

Among the duties of a partner, we can distinguish running the company's affairs (which is also his right), participation in losses or refraining from competitive activities.

The general rights and obligations of a partner (sometimes referred to as a partnership share) are understood to mean all rights and obligations of a given partner in the partnership. It is important that the provisions of the Commercial Companies Code only allow for the transfer of all rights and obligations of a partner at the same time, and not individual, independent rights and obligations in the company. The rule is that the rights and obligations of a partner shall not be split. It also means prohibiting the transfer of rights and obligations partly to one person and partly to another. However, one person may acquire all the rights and obligations of several partners. However, it should be remembered that in such a situation at least two partners must remain in the company in order for it not to be dissolved by operation of law.

The exception to the above rule is the regulation of Art. 122 of the Commercial Companies Code, which states that the sale of all rights and obligations of a limited partner does not result in the acquisition of the right to run the partnership's affairs by that partner. This is due to the fact that a limited partner has the right to run the partnership's affairs only if it results from the partnership agreement, so such right may or may not be granted to a new partner.

It should also be remembered that the rules for the transfer of rights and obligations in a partnership regulated in Art. 10 of the Commercial Companies Code will not apply to a shareholder of a limited joint-stock partnership. The rights and obligations of a shareholder are sold on the basis of the rules in force in a joint-stock company, ie by selling the shares.

Ways to transfer all rights and obligations

The act of selling all rights and obligations may consist, for example, in their sale, exchange or donation. On the other hand, the burden of all rights and obligations is unacceptable, because such an act would lead to their division, which - as already mentioned - is unacceptable. In this case, it would consist in the separation of rights and obligations between the entity that encumbrances its right (for example, the pledgee) and the entity for which such encumbrance has occurred (the pledgee).

Transfer of all rights and obligations - what are the conditions

The transfer of all rights and obligations in the company is associated with a change in the composition of partners and consists in the conclusion of an agreement between the partner resigning (leaving) from the company and the partner joining it. The provision of art. 10 of the Code of Commercial Companies and Partnerships does not require any form specific to the legal transaction of transferring membership in a partnership. Most often, the agreement between the withdrawing and acceding partner will be concluded in writing for evidence purposes. It is important that even if the company owns, for example, real estate, the contract for the transfer of a shareholding does not have to be concluded in the form of a notarial deed. This property is not the subject of the sale.

A partner joining the company - apart from signing an agreement with a partner transferring his share - does not have to additionally prepare a document of accession to the company, i.e. conclude an additional agreement between him and other partners in the company.

The possibility of transferring all the rights and obligations of a partner exists only if the following conditions are jointly met:

  • it is provided for in the articles of association;

  • the written consent of all other partners has been obtained, unless the articles of association state otherwise, i.e. the requirement of consent has been abolished or limited in some way.

It is worth mentioning that the articles of association may modify the code rules regarding the disposal of rights and obligations, for example by:

  • an indication that consent to the sale may be expressed by the partners within a specified period of time after the sale, before or during the sale;

  • introducing the obligation to agree in advance with the partners on the person who would take the place of the current partner;

  • introducing a contractual provision granting this right only to certain partners, e.g. depending on whether they have other rights in the company or to what extent they are entitled to them, e.g. granting this right only to partners authorized to run the company's affairs.

The transfer of all rights and obligations in a situation where such a possibility is not provided for in the articles of association or if the conditions for sale specified in this contract are not met, makes such an action absolutely invalid (Article 58 of the Civil Code).

As a rule, consent to the transfer of all rights and obligations should be expressed in writing for evidence purposes, but the rules regarding form may also be modified in the articles of association (e.g. by introducing a more severe form, such as the form of a notarial deed).

It is worth mentioning here that in the case of a general partnership and a limited partnership, which were established using a template agreement, it is also permissible to sell all the rights and obligations of a partner, but the transfer will only be possible with the use of the template provided in the ICT system. In this situation, the current partner and the buyer of rights and obligations submit declarations of will using a template and affix them with a qualified electronic signature or a trusted signature. Such declarations are equivalent to a declaration of intent made in writing.

The mere transfer of all the rights and obligations of the company does not require an amendment to the articles of association. The disposal of all rights and obligations has been regulated differently than joining the company (Art. 32 of the Commercial Companies Code) or leaving the company (Art. 58 of the Commercial Companies Code), which require an amendment to the articles of association. The disposal of all rights and obligations of a partner is translational, which means that they are transferred to the acceding partner to the same extent as they were due to the current partner.

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Liability of the appearing and joining the company for the obligations of the company

A partner leaving the company and a person acquiring all its rights and obligations shall be jointly and severally liable both for the obligations related to the participation of the withdrawing partner in the company and for the obligations of this company.

Liability of a partner joining the partnership for the obligations of that partnership is personal and unlimited. This means that the new partner is responsible for the obligations of the company that arose in the period from its accession to it, but also for the obligations of the company that arose in the period before joining it. The new partner will also be responsible for the obligations of the partner exiting the partnership related to his participation in the partnership, e.g. the obligation to make a contribution to the partnership. The existing shareholder will be liable limited to the obligations already existing (due and not due) at the time of his withdrawal from the company.

Joint and several liability means that an exiting and joining partner are jointly liable for the above obligations. The company may address its claims to each of them separately, to both jointly and partially to one of them.

The above liability rules cannot be modified in the articles of association with effect against third parties. Different provisions in the articles of association will have only internal effect - between partners - and not external. In the event of liability rules other than those provided for in the Code, only the rules set out in the law will apply.

Acquisition of all rights and obligations by the partner's heirs

The provision of art. 60 of the Code of Commercial Companies and Partnerships regulates the special case of his heirs entering into all the rights and obligations of a deceased partner in a general partnership. Pursuant to the above provision, the articles of association of a general partnership may provide that his heirs replace the deceased partner. Then the company is not terminated, and the contract binds the remaining partners and heirs of the deceased partner. However, the above regulation is not the same as the "transfer" of all rights and obligations referred to in Art. 10 of the Commercial Companies Code.