30 NOV 2018

Things to Know About a Deed of Dissolution

Business partners are a bit like puzzle-pieces. Sometimes they fit together perfectly and the business runs without a hitch. Sometimes there is one piece that doesn’t fit quite right. When the partnership isn’t working, a Deed of Dissolution legally ends the business partnership. Of course, either party may decide to form a partnership with another party, but the Deed of Dissolution will legally and formally dissolve their current business partnership entirely.

Deed of Dissolution

A Deed of Dissolution or “dissolution of partnership deed” is the document that partners use to legally terminate their business partnership. It is an agreement between the parties named in the original Partnership Agreement of the company about how they are going to dissolve the partnership.

A Deed of Dissolution is legal documentation that documents when the partnership ceases to exist. Partners can complete unfinished work, settle debts, and put any finishing touches on the end of their business relationship. The courts will become involved when further legal action is taken by one of the parties involved or when there is a problem that prevents the Deed of Dissolution from being executed.

The Importance of a Deed of Dissolution

Business relationships are complicated. There are always loose ends and gray areas that are hard to understand from the outside. If the Partnership Agreement was the marriage, think of the Deed of Dissolution as the divorce.

A Deed of Dissolution template typically contains the following items:

  • The identity of all the partners (referencing the Partnership Agreement),
  • Official notification of dissolution,
  • The exact date on which the partnership is over,
  • A drawn-up account of the firm’s assets and liabilities,
  • Approval of that accounting,
  • Details about how the accounts will be divided amongst the leaving/remaining partners,
  • The return of any documentation with private business information,
  • The finalization of contracts such as non-disclosure agreements (NDA),
  • Signatures of all partners involved,
  • Details about wind-up activity (if any),
  • Details about how the records of the dissolution will be retained for future use and who is responsible to produce them if necessary.

The process of writing the Deed of Dissolution gets all partners on the same page about what is happening. The dissolution of the business partnership can’t be completed until all the obligations of the partnership have been resolved, including debts, legal infractions, and tax payments. All partners are liable individually, and the extent of the liability each partner assumes is normally inferred by the terms in a Partnership Agreement.

With all these things addressed, the partnership as a whole or the extraction of one or more partners is completed with fairness and transparency.

Outcomes of the Partnership

The Deed of Dissolution is also the legal documentation that details what the outcomes of the dissolution will be. Is the business going to be dissolved and forgotten? Will it be sold off to another company? Will it be continued by some of the original partners but not the others? This Deed of Dissolution will enter into public record as a legal agreement. It can be upheld by the Malaysian courts and its terms can be scrutinized.

To create a proper legal document that covers all the bases, be sure and get your Deed of Dissolution template from a quality online legal documentation services provider that has specifics pertaining to the local law in your area. If necessary, remember to consult with a lawyer for things related to taxes and employment-related law. If your puzzle pieces are in order, the process will be smooth.

Legal paperwork is hard to handle alone. Use ShakeUp! to create a Deed of Dissolution instead.

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