Dissolving a general partnership or a limited partnership

If all partners agree to terminate a company, you may dissolve the company through mutual agreement:

1. Pay the company’s debts and distribute its assets among the partners. In the case of a limited partnership, make sure that the silent partners receive their share before the general partners. This is because silent partners are not personally liable for the company.
2. After a financial investigation, prepare a final statement. It will include information on how the company’s assets have been divided. Deliver the final statement to all partners.
3. Submit a notification of the termination of the company to the Trade Register. If all the partners have signed the termination notification, simply submitting the notification is enough. If only one partner has signed the notification, attach a termination agreement signed by all parties to the notification.

Submit a notification of termination in the Business Information System (BIS).

Partners do not always agree on the termination of a general partnership or a limited partnership. In such a case, the other partners may redeem the shares of the partner wanting to terminate the business.

If the partners cannot agree on redeeming the shares either, the partners may dissolve the company by putting it into liquidation:

1. All partners must be informed of the grounds for the dissolution before the liquidation proceedings are initiated. In the liquidation proceedings, one or more partners can act as liquidators.
2. The liquidator submits a notification of the termination of the partnership to the Trade Register. The same person also applies for a public summons from a court. In the summons, the creditors are requested to register their claims by a specific date.
3. The liquidator converts the company’s assets into cash and pays its debts and other liabilities. If the company does not have enough funds, the general partners must pay the remaining amounts from their own funds. If there are any funds left, the liquidator will distribute them among the partners.
4. Finally, the liquidator also prepares the final settlement of accounts and
5. notifies the Trade Register and the Finnish Tax Administration that the company has been dissolved.

Submit a notification of termination in the Business Information System (BIS).

The general partner of a general partnership or limited partnership can demand the dissolution of the partnership in the following situations:

• you have terminated the partnership agreement and the period of notice has passed
• the agreed partnership period has ended
• one of the other general partners goes bankrupt or their share of the company is seized
• one of the other partners dies and you do not agree to continue the business
• one of the other partners violates their obligations
• the company’s prerequisites for continuing its operations have deteriorated significantly
• the date of termination of the partnership agreement has not been agreed
• continuing the company’s operations is unreasonable, for example because of a partner’s state of health.

A company may also be dissolved if the number of partners decreases to one and does not increase within one year.

If a company is insolvent, heavily in debt and unprofitable, the only option is to dissolve it through bankruptcy proceedings.

The Finnish Patent and Registration Office may remove a company from the Trade Register if

• no notification of the company has been submitted to the Trade Register in ten years, and
• there is reason to believe that the company has ceased operations.

The partners may already have agreed on the dissolution proceedings in the partnership agreement. In such a case, proceed in accordance with the agreement when closing down the company.

If the company has business mortgages (assets used as collateral for funding), they must be redeemed before the termination notification is made. You can also transfer the mortgages to another company.

Send the required notifications to the authorities and make all payments by the due date even if the business operations had already ended. For example, make sure to file the annual tax returns, and pay value added taxes and employer’s contributions. If necessary, seek changes to tax prepayments so that you do not pay too much or too little in taxes. More information on corporate taxation

Prepare for the tax consequences resulting from the closing down of the company. However, you can reduce taxation by applying for income spreading. You are eligible for income spreading if the conditions for it are met. In income spreading, one-off income is distributed over several years, so that the tax rate does not become unreasonably high in the year when the income was received. Income spreading must be claimed from the Finnish Tax Administration before the tax adjustment for that year is completed. You can submit the claim electronically in the MyTax serviceOpens in a new window. or when submitting a tax return, ordering a tax card or making a change to tax prepayment. For more information on income spreading, see the Finnish Tax Administration’s page on self-employed individualsOpens in a new window.: Business assets and liabilities when terminating operationsOpens in a new window..

Cancel the insurance policies and other agreements connected to your business operations.

Keep the company’s accounts and financial statements for 6–10 years after the end of the last financial year.

The redemption price of a partner’s share in a general partnership or a limited partnership is not automatically the same as the amount invested when establishing the company.

The partnership agreement usually specifies the grounds for determining the redemption price, for example:

• Fixed amount
• Shareholder’s equity at a certain time
• Assessment by an external expert
• Some other calculation formula

If the partnership agreement does not contain specific conditions, the redemption price is determined by negotiation or, ultimately, in court. One option for redemption is the fair value of a partner’s share, which is usually determined based on the following criteria:

• Net assets of the company
• Shareholder’s equity
• Potential business value
• Potential future returns or risks

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