38. Limited Partnerships: statement of dissolution

(1) Subject to section 39 (Limited Partnerships: winding up of affairs on dissolution) and section 40 (Limited Partnerships: dissolution of partnership on death etc. of sole General Partner), a Limited Partnership must not be dissolved by an act of the Partners until a statement of dissolution signed by all the General Partners has been delivered by a General Partner to the Registrar of Companies.

(2) When the statement of dissolution is delivered to the Registrar of Companies, the Registrar must cancel the registration of the Limited Partnership.

(3) Contravention of subsection (1) is punishable by a fine.

39. Limited Partnerships: winding up of affairs on dissolution

(1) If a Limited Partnership is dissolved, its affairs must be wound up by the General Partners unless the activities of the partnership are taken over and continued in accordance with subsection (2) or the Court otherwise directs.

(2) After the dissolution of a Limited Partnership, the authority of a General Partner to bind the partnership, and the other rights and obligations of the Partners, continue despite the dissolution so far as may be necessary to wind up the partnership’s affairs, and to complete transactions begun but unfinished at the time of the dissolution (including the collection of contributions to be made which have become due), but not otherwise.

40. Limited Partnerships: dissolution on death etc. of sole General Partner

(1) Despite any provision, express or implied, of the partnership agreement of a Limited Partnership to the contrary, if the partnership has a single General Partner, the partnership is automatically dissolved on:

• (a) for a General Partner who is an individual—the General Partner’s death, legal incapacity, bankruptcy, or withdrawal from the partnership; or
• (b) for a General Partner that is a body corporate—the General Partner’s dissolution, insolvency, winding up or withdrawal from the partnership.

(2) On its dissolution under subsection (1), the Limited Partnership must be wound up in accordance with the partnership agreement or, on the application of a Limited Partner or a Creditor of the partnership, in accordance with the directions of the Court.

(3) However, the Limited Partnership is not required to be wound up under subsection (2) if, within 90 days after the day of the dissolution, the Limited Partners, either unanimously or as otherwise provided for in the partnership agreement, elect 1 or more General Partners. If 1 or more General Partners are elected under this subsection, the Limited Partnership is taken not to have been dissolved and the activities of the partnership may be taken over and continued as provided for in the partnership agreement or a subsequent agreement.

(4) If a Limited Partnership is dissolved under subsection (1), and the activities of the partnership are not taken over and continued under subsection (3), a statement of dissolution signed by a Limited Partner must be delivered by the partner to the Registrar of Companies. When the statement of dissolution is delivered to the Registrar of Companies, the Registrar must cancel the registration of the Limited Partnership.

41. Limited Partnerships: dissolution by Court

(1) The Court may order the dissolution of a Limited Partnership, on the application of a Partner, the Registrar of Companies or the AFSA, if:

• (a) a Partner, other than any Partner instituting the proceeding, has Contravened the Acting Law of the AIFC and, in the opinion of the Court, that Partner will prejudicially affect the conduct of business in or from the AIFC; or
• (b) a Partner, other than any Partner instituting the proceeding:

(i) has wilfully or persistently Contravened the partnership agreement or any AIFC Regulations or AIFC Rules; or

(ii) has otherwise behaved in matters relating to the partnership business, purpose or activity in a way that it is not reasonable for the other Partner or Partners to conduct the business, purpose or activity in partnership with that Partner; or

• (c) the business, purpose or activity of the partnership is being conducted at a loss; or
• (d) the partnership is being conducted in a way calculated or likely to affect prejudicially the conduct of the business, purpose or activity of the partnership; or
• (e) the partnership is being conducted in a way oppressive to 1 or more of the Limited Partners; or
• (f) circumstances have arisen that, in the opinion of the Court, make it just and equitable that the partnership be dissolved; or
• (g) it is in the interests of the AIFC to make an order dissolving the partnership.

(2) If the Court makes an order under subsection (1) for the dissolution of a Limited Partnership, the Court may give the directions it considers appropriate about the winding up of the partnership.

42. Limited Partnerships: settling accounts on dissolution

If accounts are settled after the dissolution of a Limited Partnership, the Liabilities of the partnership to Creditors must be paid first and then, subject to the partnership agreement or any other agreement between the partnership and the Creditor concerned, the Liabilities of the partnership must be paid in the following order:

• (a) to Limited Partners other than for capital and profits;
• (b) to General Partners other than for capital and profits;
• (c) to Limited Partners in relation to the capital of their contributions;
• (d) to Limited Partners in relation to the profits on their contributions;
• (e) to General Partners in relation to capital;
• (f) to General Partners in relation to profits.