Dissolving a general partnership or a limited partnership
A general partnership or a limited partnership can be dissolved by an agreement between the partners if all partners are unanimous. If there is no unanimity or no agreement on the redemption of shares the partnership may be put into liquidation. The general partner may demand the dissolution of the partnership if they have valid reasons for doing so.
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.
If the partners fail to agree on the termination of a general partnership or a limited partnership, 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 company is usually put into liquidation.
The liquidation proceedings start when the liquidator submits a notification of the liquidation and the liquidator to the trade register. One or more partners can act as liquidators. Make sure that all partners are notified of the grounds for the dissolution before the liquidation proceedings are initiated.
The liquidator 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 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.
If you have agreed on the dissolution proceedings in the partnership agreement, you should observe its provisions when closing down the company.
If the company has enterprise mortgages (assets used as collateral for funding), they should be redeemed or transferred to another company before the termination notification is made.
Send the required notifications to the authorities and make all payments by the due date even if the business operations had ended long before that. 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.
Even though your company has been closed down, you must keep its accounts and financial statements for between six and ten years after the end of the last financial year.
Prepare for the tax consequences resulting from the closing down of the company. If necessary, 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.
Remember to cancel all insurance policies and other agreements connected to your business operations.