Partnerships Act

This Act may be cited as the Partnerships Act.

Provides interpretation/definitions for addresses and related partnership/company terms (addresses for individuals, registered office for companies/limited partnerships, principal place of business for non-limited partnerships).

A limited liability partnership is excluded from the scope of this Act.

Each partner in a partnership has unlimited liability; subsection (2) distinguishes general partners with unlimited liability and registered limited partners with limited liability.

A partnership agreement may be varied before the partnership is formed if all proposed partners agree.

Where a default rule applies in relation to a partnership, it shall be treated as a term of the partnership agreement.

A partner must act with good faith: keep other partners informed and account to the partnership for certain profits or benefits, including profits from competing businesses carried on without consent.

Before forming or joining a partnership, persons and partners must disclose to prospective or existing partners any known information that would reasonably influence the other's decision; that duty can be waived by agreement.

Partners share equally in profits and must contribute equally to losses; a person is not entitled to profits or liable for losses incurred before becoming a partner; the estate of a deceased partner is liable for partnership debts incurred after they became partner.

Partners may not receive remuneration from the partnership for acting in the partnership business; partners may be indemnified in certain cases and, if the partnership fails to indemnify or pay amounts due, the partner is entitled to contribution from other partners.

Sets rules on partners' capital contributions: contribution and variation of contribution, no interest on capital contributions, and entitlement to interest on advances beyond capital at three percent per annum subject to conditions.

Partners have rights to participate in management; ordinary matters are decided by majority vote, other matters require unanimous decision; questions about legal or arbitral proceedings are ordinary matters; partners cannot agree to vary these rules.

A partner must co-operate with the person responsible for keeping the partnership's records or drawing up its accounts on behalf of the partnership.

A partnership is legally bound by acts done by a partner carrying on the partnership business.

Property acquired on behalf of the partnership, or contributed as capital, is partnership property.

Land acquired from partnership profits is co-owned by the partners in the same manner as the original land was co-owned at the date of acquisition.

Sets rules for when a document (deed) is treated as executed or delivered for a general partnership: execution by at least two partners with authority, execution expressed to be on behalf of the partnership, delivery as a deed, execution by the general partner with authority, presumptions about delivery when executed under those rules, and rules for signing when a partner is not a natural person.

The partnership may be liable for loss or injury caused by a partner acting in the ordinary course of the partnership's business.

Partners who pay amounts to discharge their personal liability reduce the partnership's obligation by the amount they paid; partners are not liable under subsection (1) for obligations to co‑partners or former partners if a relevant agreement provides otherwise.

If there has been a judgment, order or arbitral award against the partnership in the same or earlier proceedings establishing the amount of the partnership obligation.

Chief Justice may make rules on partners' secondary liability; a judgment against a partnership is not enforceable against a partner's property; limitation periods for partner liability are set out in the Second Schedule; "related proceedings" is defined.

Persons who represent or allow a partnership to be represented as a partner, and persons who were partners when such a representation was made, can be held personally liable; former partners are entitled to indemnity by the partnership for payments to discharge such liability.

A person may become a partner in an existing partnership only with the consent of all existing partners.

Ceasing to be a partner: the person dies.

A partner can resign only if they give the other partners at least three months' notice before the resignation takes effect.

Partners may expel a partner if an order under section 44 is made against that partner or the partner’s shares are attached for a non-partnership debt; partners may only expel after issuing the partner at least three months' notice.

Realization of shares of former partner (other than on winding up).

A person who stops being a partner remains personally liable under section 22(1) for partnership obligations incurred while a partner; an agreement to discharge that former partner need not be supported by valuable consideration.

A partnership must indemnify a former partner for payments the former partner made to discharge all or part of the partner's personal liability for a partnership obligation.

Limits on liability for former partners or employees arising from being 'held out' as partners; includes a definition that 'partner' can include employees.

An assignee (a person to whom an assigning partner has assigned his share) may replace the assigning partner only with the agreement of all the other partners.

Lists the events that cause a partnership to break up, including number of partners falling below two, expiry of a fixed term, court orders (including on application by a partner or the Cabinet Secretary), and rules about continued partnership after term expiration and resignation notices.

Section 36 lists effects that constitute the break up of a partnership, states continuation of certain partner authorities and obligations to conclude unfinished business, allows partners to confer authority by written agreement to continue business, and excludes involuntarily ceased partners from subsection (2).

A person who leaves a partnership because the partnership breaks up is still treated as a partner for the limited purpose of winding up the partnership, except where the person ceased to be a partner involuntarily (including death, insolvency, expulsion, or removal under an order made under section 45(1)(a) or (b)).

Section 38 grants specified permission to publish notices and to require necessary consents in relation to a partner's departure or a partnership's break up, and defines "necessary consent".

A person who acquires property after the break-up of a partnership has title that shall not be challenged, subject to the conditions in subsection (3).

If a partnership breaks up, one or more partners may wind it up under this section; differences about winding up are to be decided by a majority of the partners.

Section 41. Distribution of partner’s assets on winding up. Section 41(1)(a) each partner shall pay into the partnership any amounts which the partner owes to the partnership; Section 41(1)(b) the partnership shall pay all amounts it owes

Dissolution of partnership which has broken up.

The Court may, on application by a judgment creditor of a partner, order that partner’s interest to be charged to pay the judgment debt and interest; the Court may appoint a receiver and give directions for accounts; other partners may redeem the charged interest or buy the interest if a sale is directed.

Gives the Court the power to order removal of a partner or to break up a partnership.

An order under section 44 must specify the date a partner ceases to be a partner or the date the partnership broke up (or is expected to break up); the cessation date may be no earlier than the date the applicant became partner.

An application for an order breaking up a partnership under section 44(1)(c) may include an application for an order under section 50 or 51; and an order under section 44(1)(c) may be combined with an order under section 54 or 55, whether or not it was applied for under subparagraph (1).

The Court may give directions concerning a partner’s rights and position.

Applicants for an order caused by a partner's fraud, misrepresentation or non-disclosure are entitled to be indemnified by the partner at fault; partners not at fault are entitled, when partnership assets are distributed, to be paid amounts owed to them before any amounts are paid to the partner at fault; a partner removed by such an order retains rights to realise their share.

Defines "non-disclosure".

When an application is made under section 44(1)(a) or (b), the Court may order that the partner sought to be removed be prohibited or limited from taking part in the partnership business pending determination.

The Cabinet Secretary may apply to the Court for an order to break up a partnership; the Court may make such an order on terms it considers appropriate.

Section 52 identifies (1) three classes of persons named in subsection (1): "a partner", "a person interested in the winding up of the partnership" and "a creditor of the partnership"; and (2) subsection (2) allows the Court to order the liquidator to give security for the proper performance of his duties.

The Court may order the provisional liquidator to give security for proper performance of the liquidator’s duties.

If a person joins a fixed-duration partnership and pays a joining premium, and the partnership breaks up before its term expires, the provision addresses repayment of that premium.

A person with an interest in winding up a partnership may apply for one or more orders listed in subsection (2).

Partners must manage partnership business: each partner has responsibility for the partnership business, is an agent for partnership business, and any change in the nature of the partnership business requires agreement of all partners.

Partnerships have unlimited capacity as legal persons (subject to section 9), and a partnership must not employ a partner as an employee of the firm.

Section 9. Incapacity to commit offences

A limited partnership consists of one or more general partners with unlimited liability and one or more limited partners with liability limited to their contribution; general partners are liable for all partnership debts and limited partners are liable only up to their contributed amount at joining.

A person becomes a limited partner when registered; ceases to be a limited partner on deregistration, death, or dissolution of the partnership.

Limited partners must not take part in the management of the partnership business.

Limited partners are prohibited from withdrawing or receiving back any part of their capital contribution; if they do so in contravention, they become personally liable for partnership obligations incurred while they were limited partners.

This Act applies to limited partnerships as it applies to general partnerships, subject to sections 62, 63 and 64.

Section 61 assigns who acts for the partnership in subsections (1) and (2), states that giving a limited partner authority to act for the partnership is not an ordinary matter, and prohibits partners from varying subsections (3) or (4).

A person may become a partner in an existing partnership if all the general partners agree to the person’s admission; partners may not expel a limited partner under section 29; substitution of partners may occur if all the general partners agree or if made according to the partnership agreement.

The winding up of a limited partnership must be conducted by a general partner, unless the Court orders otherwise.

A limited partnership must establish and maintain a registered office for delivery or addressing of communications.

Rules on names of limited partnerships, listing words and forms that are restricted or treated as equivalent for registration purposes.

Section 66. Improper use of the expression "limited partnership", etc. Section 66(1)(a) a limited partnership; Section 66(1)(b) a partner in a limited partnership; Section 66(1)(c) a foreign limited partnership; or Section 66(1)(d) a

Partners of a limited partnership must state the partnership's name and the address of its registered office on any partnership document.

Lists the information items to include in an application for registration of a limited partnership.

The provision requires registration as a limited partnership and issuance of a registration certificate; it records the name, registration fact and date; and states that a partnership not formed before registration is formed upon registration.

The Registrar may make rules about the procedures for registration under the Act; the Fifth Schedule applies for this section.

Makes it an offence for a person to knowingly provide (or cause/provide through another) false information, and for a person to provide or cause or allow false changes or corrections in a notice to the Registrar; on conviction the offender may be imprisoned for up to six years or fined up to one hundred thousand shillings, or both.

Section 72 establishes offences by bodies corporate.

The registration certificate is evidence that registration requirements were complied with, that the partnership was registered on the stated date with the stated name; and copies certified by the Registrar are admissible as evidence of their contents.

Requires disclosure of partners' full names and addresses of service, and for persons who were partners at the time of an alleged act or omission their full names and a service or last known address; also refers to making claims against a partnership and to a partner or former partner in respect of a partnership obligation before proceedings for disclosure under subsections (1) or (2).

The Cabinet Secretary may, on the recommendation of the Registrar, make rules to carry the Act into effect.

The Cabinet Secretary may make regulations concerning registration and related matters for limited partnerships under this Act.

An existing partnership registered under the now-repealed Partnership’s Act and in existence at the commencement of this Act is deemed to be a partnership under this Act.