I am a partner in a partnership firm and wish to retire and hand over my share in the company to a new partner. I would no longer be involved with the company's activities and I don't want to be liable for any business decisions or financial obligations made by the company in my absence. To that effect, we had our Chartered accountant prepare a draft of the new partnership agreement, and there were two clauses in the draft that I could not get a satisfactory answer for. I would be grateful if anyone could help me to clearly understand them. Clause 1: The Retiring Partner hereby assigns and transfers all his share, right, title and interest in the said partnership business together with all the assets including goodwill and all outstanding, benefits of all permits and licenses held by the Firm and outstanding contracts for a consideration of payment paid by the New Partner to the Retiring Partner on the execution of these presents (receipt whereof the Retiring Partner doth hereby admit) to hold the same unto the New Partner absolutely but subject to all debts and liabilities of the Firm. Clause 2: The Continuing Partners agree to indemnify and keep indemnified the Retiring Partner against all loss, costs, charges and expenses that the Retiring Partner may suffer or incur on account of any claim being made against him as a Partner of the said Firm.
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1) on receipt of payment you have transferred your share all all rights in the firm. delte the words subject to debts and liabilities of the firm in the clause . if clause remains you would be liable for debts of firm incurred till date
2) the partners who continue in the firm have agreed to make good loss you may suffer in case any creditor makes any claim against you as partner of the firm
The drafting the perfectly alight and I find no changes to be required.I find no major changes required.
However do note that the firm is required to give a public notice on your retirement so as to absolve you from any future liability.
With your retirement the firm would be reconstituted which is different from dissolving the existing one and setting up a new firm.
Clause 1: States that at the time of retirement whatever were your rights in the said partnership stands transferred or reassigned in favour of the incoming partner as on the date of retirement.
Clause 2: Prior to retirement, whatever liability may be fixed at a later point post retirement, the continuing partners will stand to indemnify such costs, charges and expenses that may be fixed on you acting in your capacity as a partner during that period, post retirement as well.
Both the clauses above indicate that you have been relieved from this partnership firm
The first one denotes that what all dues to you by the company are to be paid by the new incumbent to you.
The second clause states that any liability on your name during your tenure as partner shall be your responsible.
Thus in my opinion there is nothing to be concerned about this due to the said clauses.
Thank you for your replies. Considering the partnership firm is unregistered, and has a VAT, PAN, TAN, shops & establishment license,FSSAI licence and a company account; where the old partnership deed was submitted. Should a copy of the newly drafted agreement be sent to all these bodies to protect me from future liabilities? I would also like to know that once the new partnership agreement has been drafted, is it mandatory to announce my retirement to the public in the newspaper.
you cn aissue public notice of your retirement as partner of the firm
you can alaos inform the bank and other regulatrory authorities about your retirement as partner
The newly drafted agreement should be intimated to the ROC, which is very much essential.
It will always be better to to make a public notice to this effect by publishing it in any local leading newspaper so that even if there is any claim from anyone towards the company shall become aware of the fact that you are no more in the company and that he can settle all his dues with the new partners.