Free Assignment of Partnership Interest

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Assignment of Partnership Interest

QGFullPartnership


Full Partner Rights
Economic Rights


Full partnership rights usually require consent from remaining partners as they give the new partner the right to participate in business operations and management. Economic rights refer to the old partner’s financial interest or share of profits. If the remaining partners have not admitted the assignee as a new partner, you can still assign economic rights without full partnership rights.



Your Assignment of Partnership Interest

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ASSIGNMENT of PARTNERSHIP INTEREST

THIS ASSIGNMENT (the "Assignment") made and entered into this ________ day of ________________, ________

AMONGST:

______________________________ of ______________________________
(the "Assignor")

OF THE FIRST PART

- AND-

______________________________ of ______________________________
(the "Assignee")

OF THE SECOND PART



- AND-

_________________________ of _________________________
(the "Remaining Partner")

OF THE THIRD PART

  1. BACKGROUND
  2. The Assignor is the holder of a partnership interest (the "Interest") in ______________________________ (the "Partnership"), a partnership previously established on the 3rd day of December, 2022, for the purpose of ____________________________________________________ and formed in accordance with an agreement (the "Partnership Agreement").
  3. The Assignor desires to assign the Interest to the Assignee and the Assignee desires to acquire the Interest from the Assignor.
  4. The Interest acquired by the Assignee will include all rights in the Partnership previously afforded to the Assignor including the status as partner. The Remaining Partner has agreed and gives consent to such assignment according to the terms and conditions of this Assignment.

IN CONSIDERATION OF and as a condition of the parties entering into this Assignment and other valuable consideration, the receipt and sufficiency of which consideration is acknowledged, the parties to this Assignment agree as follows:

  1. Sale and Purchase
  2. By this Assignment the Assignor withdraws from the Partnership and to the fullest extent permitted by the Partnership Agreement, assigns all its rights, interests, title and benefits in the Partnership to the Assignee. The Assignee will become a partner in the Partnership taking the place of the Assignor in the Partnership with all the rights and obligations previously afforded to the Assignor. The Assignee, as a partner in the Partnership, will be bound by the terms and conditions of the Partnership Agreement as amended. On assignment of the Interest to the Assignee, the Assignor will cease to be a partner in the Partnership.
  3. Consideration
  4. As full consideration for the assignment of the Interest the Assignee has submitted and the Assignor has accepted the following consideration: _______________________________________________
  5. Closing
  6. The closing of the purchase and sale of the Interest (the "Closing") will take place on the 3rd day of December, 2022 (the "Closing Date") at the offices of the Assignor or at such other time and place as the Assignor and Assignee mutually agree.
  7. Representations and Warranties of the Assignor
  8. The Assignor warrants that the Assignor has a general partnership interest in the Partnership and that the Assignor has the legal right to execute and perform an assignment of the Interest exclusive of the Assignor's status as partner.
  9. The Assignor warrants that the Interest is free and clear of all liens, encumbrances, restrictions and claims.
  10. The Assignor warrants that on completion of this Assignment the Assignor will retain no residual interest or interests in the Partnership.
  11. The Assignor warrants that the Assignor is not in any way in default of any of the expressed or implied terms and conditions of the Partnership Agreement. The Assignor also warrants that this Assignment is in full compliance with all terms and conditions of the Partnership Agreement.
  12. The Assignor warrants that the Assignor is not bound by any other contractual agreement or legal requirement that would be violated by this Assignment.
  13. The Assignor warrants that it has provided the Assignee with the most current copy of the Partnership Agreement inclusive of all amendments.
  14. The Assignor warrants that no other consent is required from any third party or government entity authorizing this Assignment except for those consents of the Remaining Partner contained in this Assignment.
  15. Assignee's Obligations
  16. On Closing of this Assignment, the Assignee will observe and perform any and all terms and conditions of the Partnership Agreement, relating to the newly acquired rights, that were previously binding on the Assignor.
  17. Transitional Rights and Obligations
  18. To the full extent permitted by the Partnership Agreement, all income, rights, benefits, obligations and liabilities of the Interest will belong to the Assignor before the Closing and will transfer to the Assignee after the Closing.
  19. Consent of Remaining Partner
  20. The Remaining Partner consents to the terms and conditions of this Assignment with the intent that the Assignee will become a partner in the Partnership with all of the rights, benefits, obligations and liabilities previously afforded to the Assignor under the Partnership Agreement as amended.
  21. Governing Law and Jurisdiction
  22. This Assignment will be construed in accordance with, and exclusively governed by the laws of the Province of.
  23. The Assignor and the Assignee submit to the jurisdiction of the courts of the Province of  for the enforcement of this Assignment or any arbitration award or decision arising from this Assignment.
  24. Miscellaneous
  25. Time is of the essence in this Assignment.
  26. This Assignment may be executed in counterpart. Facsimile signatures are binding and are considered to be original signatures.
  27. All warrants and representations of the Assignor and the Assignee connected with this Assignment will survive the Closing.
  28. This Assignment will not be assigned either in whole or in part by any party to this Assignment without the written consent of the other party.
  29. Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Assignment. Words in the singular mean and include the plural and vice versa. Words in the masculine gender include the feminine gender and vice versa. Words in the neuter gender include the masculine gender and the feminine gender and vice versa.
  30. If any term, covenant, condition or provision of this Assignment is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Assignment will in no way be affected, impaired or invalidated as a result.
  31. This Assignment contains the entire agreement between the parties. All negotiations and understandings have been included in this Assignment. Statements or representations which may have been made by any party to this Assignment in the negotiation stages of this Assignment may in some way be inconsistent with this final written Assignment. All such statements are declared to be of no value in this Assignment. Only the written terms of this Assignment will bind the parties.
  32. This Assignment and the terms and conditions contained in this Assignment apply to and are binding upon the Assignor, the Assignee, the Remaining Partner and their respective successors, assigns, executors, administrators, beneficiaries, and representatives.
  33. Any notices or delivery required here will be deemed completed when hand-delivered, delivered by agent, or seven (7) days after being placed in the post, postage prepaid, to the parties at the addresses contained in this Assignment or as the parties may later designate in writing.
  34. All of the rights, remedies and benefits provided by this Assignment will be cumulative and will not be exclusive of any other such rights, remedies and benefits allowed by law.

IN WITNESS WHEREOF the Assignor, the Assignee and the Remaining Partner have duly affixed their signatures under hand and seal on this ________ day of ________________, ________.


_____________________________
Witness


_____________________________
______________________________


_____________________________
Witness


_____________________________
______________________________

_____________________________
Witness


_____________________________
_________________________

Last updated November 13, 2022

What is an Assignment of Partnership Interest?

When a business partner wishes to retire or leave the company, the parties can use an Assignment of Partnership Interest to transfer their stake to someone else and continue doing business

This document details the terms and conditions of the transfer. For instance, it should specify whether the new partner is an individual or a business entity. It can also state if they’ll receive full partnership rights or economic rights only.

An Assignment of Partnership Interest is also known as:

  • Transfer of Partnership Interest Form
  • Sale of Interest in Partnership 
  • Partnership Assignment

How do I value a partnership interest?

The original Partnership Agreement should outline the value of a partnership interest. For example, this could comprise of cash investments, time and effort, vehicles, office space, furniture, and more.

Often in these agreements, a partner’s interest is equal to their capital contributions. It may be expressed as a percentage of the total capitalized value of the partnership. If the parties cannot agree on the value of the interest, they can conduct an independent appraisal of the contributions at fair market value.

Do other partners have a say in who buys the interest in a partnership?

Yes, most Partnership Agreements outline terms for selling or transferring an interest in a business. They often place some restrictions on the nature of the interest which may be acquired. As such, it’s essential to consult the original contract.

For instance, partners might limit assignments to economic interests and rights until the remaining partners approve their admission to the partnership. This prevents new partners from gaining voting rights and managerial input without the approval of the remaining partners. In this case, the Partnership Agreement would outline a process for the remaining partners to follow when granting full admission into the partnership.

How do I assign a partnership interest?

Customize LawDepot’s document template to assign partnership rights as needed. Simply answer our questionnaire to generate your document, then download it as a PDF or print out a copy. The information you’ll need to create your Assignment of Partnership Interest is as follows.

1. Partnership details

First, specify whether you’re giving full or economic rights (this often depends on whether remaining partners agree to admit the new partner). Then, select your province or territory to modify the template to the applicable laws. 

State the partnership’s name, purpose, and date it was established. 

You’ll also need to provide the names and contact information of the parties involved (e.g., old, new, and remaining partners).

2. Terms of the assignment

Describe the consideration that the new partner will pay in exchange for the partnership interest. Consideration can include money, services, or some other benefit. 

State when the agreement goes into effect. 

If there are any terms you need to add, our template provides guidelines for writing them. However, most assignments don’t need any extra terms.

3. Final details

If needed, you can specify when you’ll sign the agreement and if there will be witnesses present. Although the law doesn’t require witnesses for a partnership assignment, it’s still a good idea if the contract ever gets challenged. In this case, having a witness helps confirm the signatures on the document.

What are the tax consequences of assigning a partnership interest?

Partners are responsible for reporting their earnings individually. 

Typically, the assignor should report any capital gains or losses from the assignment on their personal income tax report

Any further tax consequences depend on your situation. Talk to an accountant to learn more.

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