Partnership Transfer Agreement

What is a Partnership Transfer Agreement?

A Partnership Transfer Agreement is an agreement that sets out the terms to which a general partnership will be transferred to a newly formed limited liability partnership (LLP). Its purpose is to formally document the transition, allowing the general partnership's current partners to become members of the new LLP, where they will retain their roles and ownership under the LLP structure.

A Partnership Transfer Agreement includes provisions on the transfer of assets, liabilities, and further relevant aspects from the general partnership to the newly formed LLP.

A Partner Transfer Agreement is not suitable for converting a general partnership into a limited partnership. It should only be used when the LLP to which the general partnership will transfer has already been incorporated and registered with Companies House.

What is the difference between a partnership transfer agreement and a business transfer agreement?

A business transfer agreement facilities the sale or transfer of an entire business or specific assets from one entity to another. For example, a sole proprietorship transferring its assets, liabilities or operations to a company. A partnership transfer agreement on the other hand is used specifically when a general partnership restructures into a limited liability partnership (LLP).

Is it mandatory to have a Partnership Transfer Agreement?

A Partnership Transfer Agreement isn't legally mandatory, but it's highly advisable when converting a general partnership to an LLP. This agreement helps clarify the terms, roles, and rights of each partner as they transition into LLP members.

 

What are the prerequisites of a Partnership Transfer Agreement?

The prerequisites for a Partnership Transfer Agreement include obtaining consent from all current partners to ensure agreement on the transfer terms. Reviewing the original partnership agreement is essential to confirm that the transfer aligns with its terms and any governing partnership laws. If the transfer involves converting to an LLP, the new LLP must be properly registered. Additionally, specific terms for transferring assets and liabilities need to be defined to ensure a seamless transition.

 

Who can enter into a Partnership Transfer Agreement?

A Partnership Transfer Agreement can be entered into by existing partners who wish to transfer their interest in a partnership, incoming partners who will assume those interests, and members of a newly formed LLP if the transfer involves restructuring the partnership into an LLP.

What has to be done once a Partnership Transfer Agreement?

Once a Partnership Transfer Agreement is completed, the following actions are typically required:

• Update Registration: Register the transfer to the Companies House if converting to an LLP;
• Notify Stakeholders: Inform clients, vendors, and creditors about the change to maintain continuity;
• Transfer Assets and Liabilities: Officially move assets, contracts, and liabilities per the agreement terms;
• Update Internal Records: Reflect changes in partnership records and financial statements, and;
• Review Compliance: Ensure compliance with partnership and LLP laws for a smooth transition.

 

What must a Partnership Transfer Agreement contain?

A Partnership Transfer Agreement should contain:

• Background including names or parties involved and transfer details;
• Definitions and interpretations;
• Consideration;
• Details on title, risk and insurance;
• Details on the employees of the new LLP, and;
• Liability and indemnity clauses.

 

Applicable law

Companies Act 2006

Limited Liability Partnership Act 2000

 

Help from a lawyer

You can choose to consult a lawyer if you need help.

The lawyer can answer your questions or help you through the process. You will be offered this option when you complete the document.

 

How to modify the template?

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.