Dissolving a general partnership or a limited partnership

If all general partners in a general partnership or a limited partnership agree that the partnership should be closed down, the partnership can be dissolved by agreement. In that case, no liquidation proceedings are required.

You must pay the partnership's debts and distribute its assets among the partners. In a limited partnership, you must ensure that the silent partners get their money before general partners. This is because the silent partners are not personally liable for the company.

After making all necessary payments, you must still prepare the final settlement of accounts. Among other things, it details how the company's assets have been distributed. Send a copy of the final settlement of accounts to all partners.

Submit a notification of the termination of the partnership to the trade register. If all partners have signed the termination notification, no further action is required. If only one partner has signed the notification, you must append to the notification an agreement on the termination of the partnership signed by all partners.

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 do not agree on that either, the partners may dissolve the company by putting it into liquidation.

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.

The liquidator submits a notification of the termination of the partnership to the Trade Register. He or she also applies for a public summons from a court. In the summons, the creditors are requested to register their claims by a specific date.

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.

Finally, the liquidator also prepares the final settlement of accounts and notifies the trade register and the tax administration that the company has been dissolved.

If you are a general partner in a general partnership of a limited partnership you can request the dissolution of the partnership in the following situations:

• you have terminated the partnership agreement and the notice period has expired
• the agreed partnership period has ended
• any of the other general partners is declared bankrupt or their share in the partnership is distrained
• any of other partners has died and there is no agreement that the partnership will continue
• any of the other partners violates their obligations
• the chances of continuing the partnership have become significantly weaker
• there is no agreement on the expiry of the partnership agreement
• continuing the partnership is unreasonable because of the state of health or financial situation of a partner or because of other changes.

A general partnership or a limited partnership can also be dissolved if the number of partners is reduced to one and does not increase within one year. A partnership may also be dissolved as a result of a bankruptcy.

The Finnish Patent and Registration Office can remove your company from the trade register if you have not made registration notifications to the trade register for ten years and your company is considered to have terminated its 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.

Prepare for the tax consequences resulting from the closing down of the company. You may also submit a request to the Finnish Tax Administration for income spreading, so that the tax burden generated by the one-off income is distributed over several years.

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.

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