Disputes between partners: VOF, partnership and limited partnership in practice

VOF, maatschap en CV: what are the differences?

In Dutch business law, the general partnership (VOF), the professional partnership (maatschap), and the limited partnership (CV) are popular forms of cooperation. In a VOF and partnership, partners generally operate a business or profession jointly on an equal footing. A CV is distinguished by the distinction between managing partners, who hold control, and silent partners who only contribute capital.

How does a dispute between partners arise?

Disputes often arise as soon as partners are no longer aligned. Think of disagreements regarding capital or labor contributions, profit distribution, or decision-making on strategic shifts. Emotions and legal uncertainties can also run high when a partner leaves or a new partner joins.

What does the partnership agreement say?

The foundation for the relationship between partners is the partnership agreement. Without written agreements, you fall back on the general rules from Book 2 of the Dutch Civil Code, which rarely aligns with the specific needs of your business. A solid contract includes clauses on dispute resolution, valuation of shares upon departure, and non-compete clauses.

Dissolution and liquidation of the partnership

In the event of irreconcilable conflicts, dissolution is often the only way out, which is a complex process. Assets must be liquidated and creditors satisfied before any profit can be distributed. In some cases, a partnership can be continued by the remaining partners, provided that clear agreements have been made in the contract.

Joint and personal liability

A major risk with these legal forms is that partners are personally and jointly and severally liable for the debts of the partnership. This means that in case of a deficit, creditors can seize your private assets, such as your home or savings. This emphasizes the importance of clear mutual agreements and risk management.

Points of attention at a glance

• Always ensure you have a written partnership agreement.
• Explicitly record agreements regarding profit sharing and working hours.
• Include an exit arrangement to regulate the departure of partners.
• Keep in mind the joint and several liability in a private capacity.
• Clearly define who has the authority to sign for the company's obligations.
• Evaluate the cooperation annually and adjust agreements in a timely manner.
• Involve a lawyer immediately upon early signs of discord.

What do you do now?

Do not let a simmering conflict escalate into a costly legal battle that threatens the continuity of your business. Involving an attorney specializing in corporate law at an early stage can help smooth over stalled relationships or guide an orderly dissolution.