Exiting a Business Partnership in Queensland

Book a phone consultation

In a dispute with your co-owners? See Shareholder Disputes in Queensland.

When a co-owner wants out

It might be your business partner who wants to leave, or it might be you. It might be a retirement that has been coming for years, or a falling out. Either way, the same questions come up:

1. Who buys the departing owner’s share: the other owners, the company or someone new?
2. What is the price, and how and when is it paid?
3. What happens to the departing owner’s roles as a director and an employee?
4. How is the departing owner released from the personal guarantees they gave?
5. What happens to any loans between the departing owner and the business?
6. What can the departing owner do next, and what must they not do?

If you own the business through a company, your shareholders agreement and the company’s constitution answer some of these. If you’re in a partnership, your partnership agreement and the Partnership Act 1891 (Qld) answer some of them. The rest has to be negotiated.

What goes wrong when it’s left late

1. There’s no exit clause, or it doesn’t work. Unless your documents say otherwise, a departing shareholder has no automatic right to be bought out. The directors can usually refuse to register a transfer of the shares, even to another owner.
2. The price becomes the argument. Without an agreed way to value the shares, each side starts with its own number.
3. Roles are left hanging. Selling the shares doesn’t usually end a directorship, and resigning as a director doesn’t end employment. Each role has to be dealt with on its own.
4. The guarantees stay in place. Leaving the business doesn’t end a personal guarantee. The departing owner usually stays liable until the bank or supplier agrees to a release.
5. Customers and staff follow the departing owner. A restraint holds only if it goes no further than is reasonable to protect a legitimate interest. Check what your existing documents already say, and make sure the exit documents keep, replace or release it on purpose.

How I help

I help Queensland business owners work out where they stand, agree the terms of the exit and put them in writing. The aim is a business that carries on, with each owner’s position properly recorded. I act for one side only: either the owner leaving or the owners staying. I work alongside your accountant, who advises on value and tax.

1. Where you stand. I read your agreements, the constitution and the guarantees. Then I tell you your position, your options and what I’d do in your shoes.
2. The terms. I help you settle the price, how it’s paid and what happens to each role. The usual structures are a sale to the other owners, a buy-back by the company, or a division of the business.
3. The documents. I prepare or review the exit deed or share sale agreement, the resignation and the releases, and negotiate them with the other side.
4. Completion. I deal with the share transfer, the company’s registers and the ASIC notices, which have deadlines. I also follow up the guarantee releases, so the records match the deal.

Some exits are designated services under the anti-money laundering laws. If yours is, the law may require me to verify your identity before I act. If you act through a company or trust, I may also need to verify who owns and controls it.

If you’re in a partnership

1. Ending it by notice. If your partnership has no fixed term, any partner can end it by notice to the others, unless your partnership agreement says otherwise. That dissolves the partnership for everyone, and any partner can then ask the court to wind up the firm’s business and affairs. So I’d rarely make it the first step.
2. Old debts. A retiring partner stays liable for debts the firm incurred before they left, unless the continuing partners and the creditors agree to release them.
3. New debts. Until clients, suppliers and lenders have notice of the change, they can treat the old partners as still in the firm. So a departing partner can be liable for debts incurred after they leave. Tell everyone the firm deals with, in writing, and advertise the change in the Queensland Government Gazette.

Why work with me

1. I’m a Queensland Law Society Accredited Specialist in Business Law, with more than 30 years’ experience acting for Queensland business owners. What accreditation means
2. Over my career, I’ve acted on hundreds of business sales, purchases, owner exits and disputes.
3. As a sole practitioner, I work directly with my clients. When you engage me, you deal with me, from the first call to completion.
4. I have experience with manufacturing and marine businesses, engineering, technical and IT firms, professional practices, health practices, business services, hospitality and retail.

Kafrouni Lawyers assisted me to resolve my partnership and company shareholder dispute over a family cattle business and property. From the start, Joe provided practical advice and options to resolve the dispute away from the courts. His perseverance and technical skill helped unravel a complex financial structure, resolved disputed shareholder claims, and resulted in a signed settlement deed rather than litigation. Joe cared to explain the legal and financial complexities behind his step by step advice and maintained our focus on the end goal. Joe's involvement certainly improved my family's position and I recommend Joe to anyone finding themselves in similar circumstances.

Joe's been our company’s lawyer from the beginning and has been instrumental in our journey as company owners and directors. When dealing with both complex and sensitive company issues, Joe is able to provide us with clearly articulated strategies that are well thought‐out and with the bigger picture in mind. He genuinely cares and is always willing to share his personal views, which are both honest and just. Joe is highly professional and knowledgeable in his field. You will definitely benefit having him on your team.

Questions owners ask

Does my co-owner have to buy my shares?
Not unless your shareholders agreement or the constitution says so, or a court orders it. A court can order a buyout only in limited cases, such as oppressive or unfairly prejudicial conduct of the company’s affairs.

How is the price worked out?
Check your agreement’s valuation clause: who values the shares, as at what date, and whether a minority holding is discounted. If there’s no clause, the price is negotiated, usually with an independent valuation.

Can the company buy back the shares instead?
It can, if it doesn’t materially prejudice the company’s ability to pay its creditors, and either the other shareholders pass a special resolution or all the shareholders agree. Ask your accountant about the tax effect first, because it can differ a lot from a sale to the other owners.

What happens to my personal guarantees?
In most cases they stay in place until the lender or supplier agrees to release you. Make the release a condition of the exit, and if it isn’t in place by completion, the owners who stay should indemnify you.

Can the departing owner be stopped from competing?
Only by a restraint that is no wider than is reasonable to protect a legitimate interest, such as the goodwill being paid for. Check what your existing documents say, and deal with the restraint expressly in the exit documents.

What if we can’t agree?
Many shareholders agreements require negotiation, then mediation, before anyone goes to court. If the exit has become a dispute, I can advise on that too.

Further reading

1. My Business Partner Wants Out: What Happens Now
2. How to Exit a Business Partnership in a Company Structure: The Basics
3. How to Exit a Business Partnership: Some Basics
4. Partnership Dissolutions: What Happens?
5. Personal Guarantees: What You Sign for Your Company
6. When a Director Departs: What Executives Need to Consider
7. Settlement Deed: Things to Consider
8. Shareholder Disputes Series (Part 8 of 10): No freedom to transfer shares

Before we speak: what to send me

If you book a consultation about an exit, these documents help me most. Send what you have; you don’t need all of them. Until we’ve spoken, I’d hold off resigning or giving any notice.

1. The shareholders agreement or partnership agreement.
2. The company’s constitution, if it has one.
3. The business’s financial statements for the last three years.
4. Any personal guarantees you’ve given for the business.
5. Any offer, proposal or letters about the exit.
6. The names of the other owners, and whether you’re the owner leaving or one of the owners staying, so I can check I’m free to act.

This page is general information, current at 26 October 2026. It isn’t advice about your situation.