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A Notice of Withdrawal from Partnership can be used by a Partner who wishes to leave a Partnership voluntarily or by Partners who wish to eject a Partner in the Partnership involuntarily due to a breach of the Partnership Agreement. By creating a written notice of the withdrawal, the Withdrawing Partner and the Partnership can protect themselves from future liability related to the Partnership.
This document may only be used if the Partnership will remain in operation after the Withdrawing Partner leaves the Partnership. However, if the Partnership will be dissolved and cease operations, a Partnership Dissolution Agreement may be used instead.
How to use this document ?
This document may be used whether the withdrawal of the Withdrawing Partner is voluntary or involuntary. A voluntary withdrawal is where a partner is voluntarily withdrawing from the partnership and wishes to give notice to the partnership (i.e. selling one's partnership interest to another party in order to retire). An involuntary withdrawal is where a partner is withdrawn from the partnership without that partner's consent, and the partnership is giving notice to that partner. Reasons for involuntary withdrawal may include the death of Partner, incapacity of Partner, the disability of Partner, the incompetence of Partner, the breach of fiduciary duty by Partner, the criminal conviction of Partner, the operation of law against Partner, or a legal judgment against the Partner.
The Partnership Agreement governing the operation of the Partnership generally includes information about the methods and requirements related to a Partner's withdrawal from the Partnership. If there is a written Partnership Agreement, it can be helpful to have a copy available to reference while completing this document to be sure that the withdrawal conforms to the pre-established guidelines.
This document includes all of the necessary information needed for either a voluntary or involuntary withdrawal including the following:
In the case of a voluntary withdrawal, the Withdrawing Partner may complete this notice and then send copies of the notice by registered mail to all of the remaining Partners at their last known addresses. If this document is being used to notify of an involuntary withdrawal, the remaining Partners complete the notice and it is preferable to then send the notice by registered mail to the Partner who is required to withdraw from the Partnership.
Partnerships are organized under provincial or territorial law. All provinces and territories allow Partners to withdraw from a Partnership at will -- absent any withdrawal restrictions -- by providing notice of the Partner's intent to withdraw. Most provinces and territories refrain from defining adequate notice. Instead, they let the Partnership set withdrawal notification requirements in the Partnership Agreement. Be sure to check for any province or territory requirements that govern this withdrawal letter to ensure compliance with provincial or territorial law.
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