Rights of assignee of share in partnership - PA 1890 s. 31
Assignee of a partner's share: only gets share of profits as agreed, cannot manage or demand accounts, on dissolution gets share of assets and an account.
An assignment by any partner of his share in the partnership, either absolute or by way of mortgage or redeemable charge, does not, as against the other partners, entitle the assignee, during the continuance of the partnership, to interfere in the management or administration of the partnership business or affairs, or to require any accounts of the partnership transactions, or to inspect the partnership books, but entitles the assignee only to receive the share of profits to which the assigning partner would otherwise be entitled, and the assignee must accept the account of profits agreed to by the partners. In case of a dissolution of the partnership, whether as respects all the partners or as respects the assigning partner, the assignee is entitled to receive the share of the partnership assets to which the assigning partner is entitled as between himself and the other partners, and, for the purpose of ascertaining that share, to an account as from the date of the dissolution.
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
If someone buys or takes a mortgage on a partner's share in a partnership, that person (the assignee) does not get to join in running the business. During the partnership, the assignee only gets the profits that the partner would have received, and must accept whatever profit figure the partners agree on. The assignee cannot demand to see the accounts or inspect the books.
When the partnership ends, or when that partner leaves, the assignee gets the partner's share of the partnership assets, plus a proper accounting to work out what that share is.
When it applies
- A person lends money to a partner and takes a mortgage on that partner's share, then tries to attend partnership meetings to check on the business.
- A partner assigns his share to his wife as a gift, and she asks to see the partnership accounts.
- A partner's creditor obtains a charge on the partner's share and then demands to inspect the partnership books.
- On dissolution of the partnership, the assignee of a share claims the proceeds of sale of partnership property.
- A partner assigns his share by way of redeemable charge, and the assignee objects to a business decision the remaining partners make.
What this section does not say
- The provision does not cover the valuation of the assigned share or the method of calculating profits.
- It does not address the assignee's liability for partnership debts.
- It does not apply to a partner's right to assign his share (that is a separate matter).
- It does not govern the situation where a partner dies or becomes bankrupt (see section 33).
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This page reproduces the text of PA 1890 s. 31 in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in England and Wales.