How do you leave a partnership?
By Stan Galbraith | October 25, 2011
Mike asked:
How do I leave a partnership? I'm a 50 per cent owner in a business that my partner and I incorporated in Saskatchewan.
Stan Galbraith answered:
This question is difficult to answer. Once you have incorporated and you own shares in a private company (not listed on a stock exchange) you cannot sell those shares unless the company agrees to take them back or your partner agrees to buy them or (if allowed by the company documents) you can sell them to someone else. This can be avoided with the use of a Shareholders Agreement prepared by a lawyer that covers issues such as how the partners can get out.
You can resign as a director of the corporation as long as this does not take you below the limit stipulated when the company was formed. For example, many people that start their own company will stipulate that the company must have two directors and this means you cannot resign if there are currently only two directors. Also, directors are personally liable for things such as unpaid GST and unpaid employee remittances so it is very important to determine your status and take the proper steps to protect your position.