Estonia Commercial Code - Relations of General Partnership with Third Persons

Estonia Companies Act

Estonia Companies Act Estonia Companies Act Estonia Companies Act

Chapter 14 RELATIONS OF GENERAL PARTNERSHIP WITH THIRD PERSONS  

§ 98. Representation of general partnership

 (1) Each partner may represent the general partnership in making all transactions unless the partnership agreement prescribes otherwise.

 (2) The partnership agreement may provide that the general partnership may be represented by all or some of the partners jointly. These partners may authorise one or several partners among themselves to perform a certain transaction or act. Each partner who grants an authorisation may cancel the authorisation. Joint representation shall apply with regard to third persons only if it is entered in the commercial register.

 (3) The managing partners may jointly grant the right of representation of the general partnership to a third person. Each managing partner may cancel the right granted to a third person.

 (4) A person entitled to represent the general partnership may represent the general partnership in all relations with third persons. A restriction on the right of representation shall be invalid with regard to third persons.

§ 99. Procurator of general partnership

  A procurator of a general partnership shall be appointed jointly by the managing partners. Each managing partner may cancel the procuration.

§ 100. Deprivation of right of representation

  A court may deprive the right of representation of a partner at the request of all the other partners if there is good reason. The primary good reason shall be non-performance of an obligation to a material extent by the partner or inability to represent the general partnership.

§ 101. Liability

 (1) A general partnership shall be liable for its obligations with all of its assets.

 (2) The partners shall be solidarily liable for the obligations of the general partnership with all of their assets. A partner may be required to perform obligations only in money.

 (3) An agreement which is in conflict with the provisions of subsection (2) of this section shall not apply with regard to third persons.

 (4) A partner has the right to present all objections against the claim of a creditor which the partner may present themselves or which the general partnership could present. A partner shall not lose the right to the objections even if the general partnership waives them or recognises its obligation.

 (5) A partner may refuse to perform the obligations of the general partnership until a creditor has filed a claim against the general partnership which is not satisfied or as long as the general partnership has rights in respect of the creditor which may allow for the claim to be dismissed. Compulsory enforcement shall not be imposed on a partner pursuant to an enforcement document against the general partnership.

§ 102. Liability of partner joining or departing from general partnership

 (1) A person who becomes a partner of a general partnership shall also be liable for the obligations of the general partnership which arose before the person became a partner.

 (2) A former partner of the general partnership shall also be solidarily liable with the other partners for an obligation of the general partnership which arose before entry of the departure or exclusion of the partner in the commercial register if the due date for performance of the obligation has arrived or arrives within five years after departure or exclusion.

 (3) An agreement which is in conflict with the provisions of subsections (1) or (2) of this section shall not apply with regard to third persons.

 (4) [Repealed - RT I 1998, 59, 941 - entry into force 10.07.1998]

Chapter 15 DISSOLUTION OF GENERAL PARTNERSHIP AND DEPARTURE OF PARTNER  

§ 103. Bases for dissolution of general partnership and continuation of activities

 (1) A general partnership shall be dissolved:
 1) by a resolution of the partners;
 2) by a court ruling;
 3) upon expiry of a term or achievement of an object;
 4) on another basis provided by law.

 (2) The partnership agreement may prescribe that the general partnership shall also be dissolved upon departure of a partner from the general partnership, the bankruptcy of a partner or upon the death of a partner who is a natural person, or dissolution of a partner who is a legal person.

 (3) If dissolution of the general partnership is prescribed by the partnership agreement or if the general partnership is dissolved upon expiry of a term or achievement of an object, the partners may decide on continuation of the activities of the general partnership, or on merger, division or transformation of the general partnership. A resolution on continuation of activities shall be adopted if more than three-quarters of the votes of the partners are in favour unless the partnership agreement prescribes a greater majority requirement.

 (4) The partners shall submit a joint petition for entry of the continuation of activities in the commercial register. The resolution on continuation shall enter into force as of its entry in the commercial register.

§ 104. Dissolution of general partnership by resolution of partners

  A general partnership may be dissolved by a resolution of the partners if more than three-quarters of the votes of the partners are in favour unless the partnership agreement prescribes a greater majority requirement.

§ 105. Dissolution of general partnership by court judgment

 (1) At the request of a partner, a court may decide on dissolution of the general partnership if there is good reason. The primary good reason shall be non-performance of a material obligation by a partner or the impossibility of its performance.

 (2) An agreement which is in conflict with the provisions of subsection (1) of this section shall be void.

§ 106. Successor joining general partnership

 (1) Upon the death of a partner, his or her successors have the right to join the general partnership if prescribed by the partnership agreement or if all the partners agree to it.

 (2) If the partnership agreement prescribes that only one successor may become a partner but neither this person nor the procedure for selecting him or her is specified, the person may be specified by the will of the bequeather. The partnership agreement may prescribe that a successor may join the general partnership only with the consent of the other partners.

 (3) Upon the consent of the other partners, a successor or successors may be granted the status of a limited partner by which the general partnership shall be deemed to be transformed into a limited partnership. A partner who is a successor has the right to the same share of profit as the deceased general partner. The partnership agreement may prescribe a reduction in the share of profit of a successor if the share of profit of the bequeather was increased in consideration of his or her activities or increased responsibility.

 (4) If a successor does not wish to or cannot join the general partnership or if the partners do not agree to the successor joining the general partnership, the successor has the right to receive a share of the compensation, corresponding to his or her share of the succession, which the deceased partner would have received upon departure from the general partnership.

 (5) If one of the successors joins the general partnership, the corresponding share of the compensation which the deceased partner would have received shall be taken into account in calculating the successor’s share of the succession.

 (6) A successor may submit a petition to join the general partnership within three months from the date the successor becomes aware of the successor’s right of succession.

 (7) If a partner who is a successor departs or is excluded from the general partnership, or the general partnership is dissolved, or the partner is given the status of a limited partner during the term specified in subsection (6) of this section, the partner who is a successor shall be liable for the obligations of the general partnership which exist at that moment to the extent of his or her share of the succession.

§ 107. Departure of partner from general partnership

  A partner may depart from the general partnership at the end of the financial year by giving at least six months’ advance notice thereof unless the partnership agreement prescribes a shorter term.

§ 108. Exclusion of partner on petition of other partners

  If the bases for dissolution of a general partnership provided for in § 105 of this Code become evident, a court may, on the petition of the other partners, decide on exclusion from the general partnership of the partner who caused these circumstances.

§ 109. Exclusion of partner on petition of creditor

  If satisfaction of the claim of a creditor of a partner from the assets of the partner is unsuccessful, the creditor of the partner may request within six months after the failure of the execution, that a court exclude the partner from the general partnership and that the claim of the creditor be satisfied from the compensation payment to be paid.

§ 110. Assumption

  If a general partnership has two partners and one of them has left or is excluded from the general partnership pursuant to §§ 107-109 of this Code, a court may, on the petition of the other partner, decide that this partner shall continue activities as the legal successor of the general partnership as a sole proprietor and that the general partnership shall be dissolved without liquidation.

§ 111. Compensation

 (1) Upon departure or exclusion of a partner from the general partnership, the partner shall be paid as compensation the share of the assets of the general partnership which the partner would receive if the company were dissolved on the date of departure or exclusion of the partner. The partnership agreement may prescribe a different procedure for the calculation of compensation.

 (2) Compensation shall be paid not later than six months after departure or exclusion of the partner unless otherwise agreed. Compensation shall be paid with interest in an amount provided by law.

§ 112. Making of entry concerning dissolution of general partnership and exclusion of partner

  The partners shall submit a joint petition for entry of the dissolution of the general partnership in the commercial register. An entry concerning the exclusion of a partner shall be made on the basis of a court judgment.

§ 1121. Duty to submit bankruptcy petition

 (1) In the case of the permanent insolvency of a general partnership, the legal representatives of the general partnership shall submit the bankruptcy petition of the general partnership promptly but not later than within twenty days after the date on which the insolvency of the general partnership became evident.

 (2) If it becomes evident that a general partnership has become insolvent, only the payments necessary under the circumstances shall be made on account of the general partnership.

 (3) In the case of violation of a requirement provided in subsection (1) or (2) of this section, the persons obligated to submit the petition are solidarily liable for the damage caused by the violation. The persons obligated to submit the petition are required to compensate any payments made after the date on which the insolvency became evident to the general partnership, except in the case where making the payments under the circumstances in question conforms to the due diligence requirements. The limitation period of the claim is five years after the violation of the obligation.

Chapter 16 LIQUIDATION OF GENERAL PARTNERSHIP  

§ 113. Basis for liquidation

  A general partnership shall be liquidated upon dissolution unless otherwise provided by law.

§ 114. Appointment of liquidators

 (1) The liquidators of a general partnership shall be the partners unless the partnership agreement or a resolution of the partners prescribes otherwise. The legal successors of a partner shall appoint one liquidator to jointly represent them.

 (2) Upon agreement of the partners, a third person may be appointed as a liquidator. At the request of a partner, a court may, with good reason, appoint a person who is not a partner as a liquidator.

 (3) Upon the bankruptcy of a partner, the trustee in bankruptcy shall participate in the liquidation instead of the partner.

 (4) [Repealed - RT I 1998, 59, 941 - entry into force 10.07.1998]

 (5) The partners shall specify the procedure for and amount of remuneration of liquidators. If the partners do not reach an agreement on the procedure for and amount of remuneration, a court may be requested to specify them.

§ 115. Removal of liquidators

 (1) The partners may remove a liquidator if all partners vote in favour of the removal.

 (2) A court may remove a liquidator with good reason on the petition of a partner or other interested person.

§ 116. Entry of liquidator

 (1) The partners shall submit a joint petition for entry of the first liquidators in the commercial register. A petition for entry in the commercial register of a change of liquidator or the right of representation of a liquidator shall be submitted by the liquidators. The resolution which constitutes the basis for the change of a liquidator or the right of representation of a liquidator shall be appended to the petition. All liquidators shall submit to the registrar a written confirmation concerning their right pursuant to law to act as liquidators.

 (2) The appointment or removal of a liquidator on the basis of a court judgment shall be entered in the commercial register by the registrar on the basis of the court judgment.

 (3) The names and personal identification codes of the liquidators shall be entered in the commercial register.

§ 117. Rights and obligations of liquidators

 (1) The liquidators shall terminate the activities of the general partnership, collect debts, sell the assets of the general partnership and satisfy the claims of creditors.

 (2) The liquidators only have the right to conclude transactions which are necessary for liquidation of the general partnership.

 (3) The liquidators shall represent the general partnership.

 (4) If the general partnership has several liquidators, the liquidators only have the right to represent the general partnership jointly. The liquidators may authorise one or several from among themselves to perform a certain transaction or certain type of activity.

 (41) The right of one liquidator or some of the liquidators to represent the general partnership separately may be prescribed by the partnership agreement, a resolution of the partners or a court decision. The right of sole representation applies with regard to third persons only if it is entered in the commercial register.

 (5) A restriction on the authority of the liquidators shall be invalid with regard to third persons.

 (6) During a liquidation proceeding, the notation “likvideerimisel” [in liquidation] shall be appended to the business name of the general partnership.

§ 118. Accounting during liquidation

 (1) A general partnership undergoing liquidation shall organise its accounting pursuant to the procedure provided by the Accounting Act unless otherwise provided by the law or the nature of liquidation.

 (2) Within three months after the date of the dissolution resolution, the liquidators shall prepare, taking account of the provisions concerning the balance sheet contained in the annual report, the opening balance sheet of the liquidation and a report explaining such balance sheet which shall contain the information subject to inclusion in the annexes of the annual accounts.

 (3) With the passing of the dissolution resolution, the current financial year of the general partnership shall end and a new financial year shall begin. The liquidators shall prepare the annual accounts of the general partnership as at the end of the financial year which ends at the time of dissolution of the general partnership and as at the end of every financial year following dissolution.

 (4) The partners shall approve the opening balance sheet of the liquidation and the annual report by a resolution. After approval, the opening balance sheet of the liquidation and the annual report shall be immediately submitted to the commercial register.

 (5) After completion of the liquidation, the liquidators shall prepare the final balance sheet.

§ 119. Distribution of assets of general partnership

  After satisfaction of the claims of creditors, the liquidators shall distribute the remaining assets among the partners corresponding to the contributions of the partners unless the partnership agreement prescribes otherwise.

§ 120. Liability of partners upon liquidation of general partnership

 (1) If the assets of a general partnership are not sufficient to cover the claims of creditors, the partners shall be liable for the obligations of the general partnership in proportion to the amounts of their contributions unless the partnership agreement prescribes otherwise.

 (2) If the part to be paid by a partner provided for in subsection (1) of this section cannot be collected from a partner, the other partners shall cover the deficit in proportion to their contributions unless the partnership agreement prescribes otherwise. The partner whose part of the debt is paid by the other partners shall compensate this part of the debt to them.

 (3) If the claims of creditors can also not be satisfied pursuant to the procedure provided for in subsection (2) of this section, the liquidators shall submit a bankruptcy petition for the general partnership.

 (4) The provisions of § 101 of this Code shall apply to the right of a creditor to demand satisfaction of the creditor’s claim.

§ 121. Relations among partners and relations with third persons

  During liquidation, the provisions of §§ 85-102 of this Code shall apply to relations among partners and to relations between the general partnership and third persons. If satisfaction of the claim of a creditor of a partner from the assets of the partner is unsuccessful, the creditor of the partner may request that a court exclude the partner from the general partnership and that the claim of the creditor be satisfied from the compensation payment to be paid unless the provisions for liquidation provide otherwise.

§ 122. Deletion from commercial register and deposit of documents

 (1) After completion of liquidation, the liquidators shall submit a petition to the commercial register for deletion of the general partnership from the commercial register. The final balance sheet shall be appended to the petition.

 (2) The liquidators shall deposit the documents of the general partnership with a liquidator or, based on the resolution of the partners, with a third person or an archive. If the liquidators have not assigned the depositary of documents, the depositary shall be appointed by the court.

 (3) The name, residence or registered office, and personal identification code or registry code of the depositary of documents shall be entered in the commercial register on the petition of the liquidators or, in the case of a court-appointed depositary, on the basis of the court ruling. Upon a change of depositary, the transferor shall notify the registrar before the transfer in order to allow for the entry of new information in the register.

 (4) Partners and their successors have the right to examine and use deposited documents. Third persons may examine the documents only if they have a legitimate interest.

 (5) A general partnership is responsible for the preservation of documents created or received as a result of its activities during the term prescribed by law. Upon liquidation of a general partnership, the documents of the general partnership which are to be preserved may be transferred to an archives upon agreement with the archives. Upon a transfer of documents to an archives, the responsibility for preservation of the documents transfers to the archives.

§ 123. Distribution of assets without liquidation proceeding

 (1) If the partners decide to dissolve the general partnership without a liquidation proceeding, the claims of a third person shall be satisfied pursuant to the provisions for liquidation of the general partnership. A majority of over three-quarters of the votes of the partners is required to adopt a resolution on dissolution without a liquidation proceeding unless the partnership agreement prescribes a greater majority requirement.

 (2) If a general partnership is dissolved due to the exclusion of a partner on petition of a creditor (§ 109), the general partnership may be dissolved without liquidation only with the consent of the creditor who petitioned for the exclusion of the partner.

§ 124. Claims asserted against partner

  If a general partnership is dissolved, a partner shall be solidarily liable with the other partners for the obligations of the general partnership for five years after dissolution of the general partnership. Agreements which derogate from this requirement shall not be applicable with regard to third persons.

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