Dissolution of Partnership.The extinction of a company is the process by which the employer carries out the necessary procedures to proceed with the closure of the company. The extinction process is made up of certain acts provided for in the legislation and that are mandatory.Sure, here’s an example of a dissolution of partnership:
Dissolution of Partnership Example You Should Know.
John and Mark were two friends who decided to start a business together. They formed a partnership and contributed equal amounts of capital to start the business. However, after a few years of running the business, John and Mark started having disagreements over the direction of the company. John wanted to focus on expanding the business, while Mark wanted to maintain the status quo.
The disagreements became more frequent and began to affect the performance of the business. Eventually, John and Mark decided that it was in their best interest to dissolve the partnership. They agreed to sell off the assets of the business and split the proceeds equally. They also agreed to pay off any outstanding debts and liabilities of the business before dividing the remaining funds.
After the assets were sold and the debts were paid, John and Mark divided the remaining funds equally. They each went their separate ways and started new ventures, wishing each other the best of luck.
Causes;Dissolution of Partnership Example.
1. Agreement of the General Meeting of partners.
2. Companies must be dissolved for the following reasons (legal or statutory causes):
- Due to the cessation of the activity or activities that constitute the corporate purpose . In particular, it will be understood that the termination has occurred after a period of inactivity of more than one year.
- By the conclusion of the company that constitutes its object (it will affect those companies whose object is a very specific activity and that will end. An example may be the construction of a certain work. At the end of the work, the company must be dissolved).
- Due to the manifest impossibility of achieving the social purpose . In this case, the impossibility may arise both from obtaining profit and from the difficulty of developing the corporate purpose. It must be caused by unforeseen circumstances of a different nature (technical, human, economic, etc.) or by external or internal causes that prevent the achievement of the purpose for which the company was created. The causes must be clear and manifest and of a permanent nature to justify its dissolution.
- Due to the paralysis of the corporate bodies so that their operation is impossible (for example, the operation of the General Meeting).
- For losses that reduce the net worth to an amount less than half of the social capital , unless it is increased or reduced to a sufficient extent, and provided that it is not appropriate to request the declaration of bankruptcy.
- By reducing the share capital below the legal minimum , which is not a consequence of compliance with a law (The agreement to reduce the capital below the legal minimum would be null and void, as it is contrary to the Law. The decision must be made by the General Meeting that will conclude if it ends up dissolving the Company or if it increases the capital up to a figure greater than or equal to its minimum capital).
- Because the nominal value of the non-voting shares or non-voting shares exceeds half of the paid-up capital stock and the proportion is not restored within two years.
- For any other cause established in the statutes (the law allows corporations and limited liability companies to establish in their statutes other legitimate causes for dissolution).
- Judicial ruling declaring the nullity of the company.
- Special cases :