General partnership - running the partnership's affairs and dissolving it (part 7)

Service

Handling the affairs of a general partnership relates to the sphere of internal relations of the company, i.e. its management. The area of ​​internal relations of the company covers matters directly related to its operation and relations between partners. Find out more about the general partnership!

General partnership and case management

The partners of a general partnership may freely define the rules of conducting its affairs in the articles of association. The shareholders' freedom is limited by Art. 38 of the Commercial Companies Code (hereinafter the Commercial Companies Code), pursuant to which:

  • you cannot entrust the management of the company's affairs to third parties, with the exception of partners,

  • the right of a partner to view the company's books and documents in person and to obtain information about the company's assets and interests cannot be limited.

It should be added that the above provision implies the possibility of running the partnership's affairs by third parties, but only if even one of the partners is also entitled to this right.

As a rule, since a general partnership does not have specialized management bodies, the right and obligation to conduct its affairs applies to all partners. In the general partnership agreement, managing the partnership's affairs may be structured as follows:

  • entrusted to one or more partners,

  • a partner may be deprived of the right to run the partnership's affairs,

  • specification of the scope of matters that a partner may conduct without obtaining the consent of other partners.

Attention!

A shareholder may be deprived of the right to run the partnership's affairs on the basis of a court decision, for important reasons, which include, for example, taking actions beyond the scope of his authorization.

If the matter of managing the affairs of a general partnership is not regulated in the contract, the code rules will apply, which are as follows:

  • a partner without a resolution of the partners may conduct matters falling within the scope of ordinary activities of the partnership,

  • if any of the partners raises an objection before dealing with a matter not exceeding the scope of ordinary activities, then it will be necessary to adopt a resolution,

  • a partner may perform an emergency action without a resolution, if failure to do so would expose the company to losses,

  • the consent of all partners is required to settle an issue exceeding the scope of ordinary activities.

If a resolution is required to settle an issue falling within the scope of ordinary activities, and the running of the partnership's affairs is entrusted only to some partners, then the resolution must be adopted by the partners authorized to run the partnership's affairs.

If, on the other hand, a resolution is required in relation to the settlement of an issue that exceeds the scope of ordinary activities, then the resolution must be adopted by all partners of the general partnership, even those excluded from running the partnership's affairs. In both cases, resolutions are generally adopted unanimously, however, the articles of association may regulate this issue differently.

Particular attention should be paid to the issue of establishing a commercial proxy in a general partnership. The legislator regulated it in such a way that the competence to establish it was vested in the partners authorized to run the partnership's affairs. On the other hand, each of the partners managing the company's affairs is entitled to dismiss the commercial proxy.

Important!

In order for the dismissal of a commercial proxy to have legal effect outside, i.e. effective against third parties, e.g. partners of a general partnership, the proxy must be recalled by a partner who is simultaneously authorized to run the partnership's affairs and represent it.

This is due to the distinction between the zones of relations in a general partnership - internal and external. A partner authorized to run the partnership's affairs may perform legal actions that will have a legal effect binding on the partners, and in order for an action to have legal effect externally, the partner must be authorized to represent the partnership - to perform important legal acts in external relations. Thus, the dismissal of a commercial proxy by a partner authorized to run the partnership's affairs, but not authorized to represent it, only constitutes a decision that must be enforced.

Representation of a general partnership

The issue of representation of a general partnership relates to the external sphere of the company's relations, i.e. situations in which partners act outside on behalf of the partnership.

As a rule, every partner is entitled to represent the partnership. In this case, the articles of association may also exclude certain partners from representing the company, and it may also occur pursuant to a legally valid court decision.

In the articles of association, partners may derogate from the rule that each partner is entitled to represent the company by establishing joint representation. This means that the effectiveness of legal actions performed as part of the company's representation depends on the cooperation of two partners or a partner and a proxy. Moreover, it is allowed to differentiate in the articles of association the manner of its representation depending on the value of a given legal transaction.

Example 1.

A partner with the right to represent the company on his own may conclude a service agreement worth PLN 5,000, but if the value of the services was PLN 10,000, cooperation between two partners or a partner with a proxy would be necessary.

Important!

Differentiating the manner of representing the company depending on the value of the legal transaction does not constitute a restriction against third parties. It is also not a limitation of the scope of the partner's authorization to represent.

The scope of activities performed as part of the representation of a general partnership includes all court and out-of-court activities, which means that it is determined by the scope of the company's operations. Nevertheless, the articles of association may indicate certain activities which require a resolution of the shareholders to perform. However, it should be emphasized that such a contractual provision has an effect in internal relations - between partners.

Example 2.

The partner sold the real estate belonging to the general partnership himself, while under the partnership agreement, joint representation is required to perform such an action. Nevertheless, the real estate was successfully sold, which results from the prohibition on limiting the scope of the right of representation against third parties. Such conduct of the partner will, however, be the basis for excluding the partner from representation by the court.

The ban on limiting the scope of the right of representation was introduced by the legislator in order to protect the certainty of business transactions and to prevent the emergence of a state of uncertainty as to the effectiveness of representing the company in specific legal actions.

General partnership and liability for its obligations

Contrary to the rules of managing the company's affairs and its representation, which may be freely shaped by the partners in the articles of association, the issues related to liability are strictly binding - the partners cannot freely shape them. The principle of liability for the obligations of a general partnership is set out in Art. 22 § 2 and art. 31 of the Code of Commercial Companies. Pursuant to these provisions, liability for the obligations of a general partnership is subsidiary and joint and several.

Pursuant to the principle of subsidiary liability, the creditor is first satisfied with the company's assets, and only when this execution proves ineffective, joint and several liability of partners will apply. Therefore, we are dealing with a subsidiary liability of a partner in relation to the liability of the company and a joint and several liability at the level of partners.

Bringing a claim against a partner is possible after enforcement against the company, which turned out to be ineffective, i.e. did not allow for the satisfaction of the receivables. The creditor may, however, require an inventory of the company's assets or a current balance sheet of the company. When these documents clearly show that the company's assets are insufficient to satisfy the creditor's claims, the debtor may bring an action against the partner.

 

Important!

It is possible to bring an action against a shareholder before enforcement against the company's assets proves ineffective.

Thus, the court may give an enforcement clause an enforcement clause against a specific partner in a general partnership. The partner is then liable without limitation with all his assets. It follows from the essence of joint and several liability that if any of the partners fulfills the creditor's performance in whole or in a large part, he may request the return of the rendered performance from partners who have not satisfied the claim at all or have satisfied it in a smaller part.

Attention!

The partners are jointly and severally liable for the obligations arising before the registration of the company and are jointly and severally liable for the company's tax arrears!

It should be emphasized that pursuant to Art. 32 of the Commercial Companies Code, a partner joining a general partnership is jointly and severally liable for the obligations of the general partnership established before his accession to the partnership.

The legislator drew attention to the situation when the general partnership agreement is concluded with a sole proprietorship, e.g. an entrepreneur running a sole proprietorship or a sole proprietorship. In such a case, the person who concludes a general partnership agreement with a sole proprietorship shall be liable for the obligations arising in connection with running this enterprise before the date of establishing the general partnership. Liability is limited to the value of the contributed enterprise as at the time of payment and according to the prices at the time of satisfaction of the creditor.

Dissolution of the general partnership

Upon termination of activity, a general partnership requires the liquidation of the company. However, it is not always a necessity - partners may, in the articles of association of a general partnership, agree on a different method of termination of activity.

The possibility for partners to withdraw from the liquidation of the company is provided for in Art. 67 § 1 of the Commercial Companies Code. The advantages of such a method of dissolving the company can be seen in the absence of the reporting obligation (opening and closing balance of liquidation), as well as in limiting the registration obligations (application for opening liquidation). Establishing a method of dissolving the company other than liquidation also allows for a more arbitrary way of dividing the assets. In the event of liquidation, we are obliged to collect the company's receivables and only after that the company's assets can be liquidated.On the other hand, if liquidation is omitted, the partners may divide the property in kind, so the company's receivables may constitute assets that will also be divided.

If the partners did not specify a different method of dissolution in the articles of association, the dissolution of the company is preceded by liquidation, and the liquidation itself begins with the occurrence of the premises for the dissolution of the articles of association, which are:

  • unanimous resolution of the shareholders,

  • the reasons specified in the general partnership agreement,

  • termination by a partner or his creditor,

  • declaration of bankruptcy of the company,

  • death of a partner or declaration of its bankruptcy,

  • dissolution of the company by the court - each of the partners may submit such a demand if there are important reasons.

As a rule, all partners are liquidators, but they may agree among themselves that only one or more of them perform this function. Moreover, shareholders may appoint a third party to be a liquidator, and a court may also appoint a liquidator. He must report the opening of liquidation to the registry court, and the very fact of appointing a liquidator, who at this stage of the company's operation performs representative functions, is also subject to entry.

The actions of the liquidator are aimed at terminating the company's operations, and therefore the task of the liquidator is to collect the company's receivables, satisfy its creditors, liquidate the property and divide it among partners, in accordance with the rules set out in the general partnership agreement. If the agreement is silent on this matter, the code rules apply, according to which the shareholders' contributions are refundable and the remaining surplus is divided between the partners according to their share in the company's profits.

Only after such liquidation, the liquidator submits an application to the registry court to remove the company from the register. The company is dissolved on the day the company is deleted.

On the other hand, dissolution of a company without liquidation takes place most often on the basis of a joint resolution of the shareholders. By this resolution, the partners also divide the company's assets, setting the rules for the repayment of the remaining receivables. The details of the division of property may take the following form:

  • division of assets, after the company's creditors are satisfied,

  • withholding a certain amount needed to cover the company's outstanding and unmatured liabilities, then dividing the remaining assets between the partners,

  • sale of all the company's assets and satisfaction of the creditors from the obtained amount, then dividing the surplus between the partners,

  • the entire enterprise is retained by one of the partners with the obligation to repay the others.

The interests of the creditors of the partners of a general partnership who decide to terminate it are protected in such a way that the partners become legal successors of the partnership after its dissolution. Such an opinion was expressed by the Supreme Court in the judgment No. II CSK 134/09. This means that if the partners did not agree in the resolution on the dissolution of the company on the method of satisfying the company's creditors, the creditors may pursue their claims against the partners of the company that no longer exists.