Share of business value and good will for a retiring partner

Querist : Anonymous (Querist) 09 August 2021 This query is : Resolved
one of my client is a partner in a firm with his two brothers. They are insisting my client to retire from the firm and he will be paid only capital balance standing to his credit on the date of retirment.

The partnership deed has a clause as follows:
"Any partner who wishes to retire from the firm may do so by giving three months notice to the other partners and retire by taking the money standing to the credit of his capital account. He shall have no right to the goodwill or other assets of the firm".

The firm is having 100 crore business and is a debt free firm earning profit.

My query is whether my client is barred from claiming his share of business based on valualtion of business and
also share of goodwill to be valued based on valuation of business and goodwill by an expert.

what course of action can be taken as merely acceipting his share of capital to the credit of his capital account is
not fair.

Follow Query

Report Abuse

Quick Summary

A partner is being asked to retire from a family firm and is only being offered their capital balance, despite the firm's significant value and profitability. The partnership deed excludes claims to goodwill or other assets upon retirement. While the deed restricts claims, partners cannot force another to retire against their will. An amicable settlement is advised, otherwise, the retiring partner should consider legal action rather than signing a retirement deed that undervalues their contribution.

P. Venu (Expert) 10 August 2021
Any withdrawal or retirement could only be at the volition of the partner concerned. As such, the said partner has the option not to succumb and has the autonomy to set the terms for retirement if the other partners are so insistent.

kavksatyanarayana (Expert) 10 August 2021
As per the clause of Partnership Deed, the retiring Partner cannot ask for goodwill or profit. But the other Partners cannot force him to retire from the Firm business for their benefit. Try to amicable settlement, otherwise, he should not sign in the retirement deed and proceed legally if necessary.

Previous

Next

You need to be the querist or approved LAWyersclub expert to take part in this query .

Click here to login now

Similar Resolved Queries :

Ask Query
Unanswered Queries