The primary impact of incorporation is that the business that was previously carried on in a partnership is now carried on by a company owned by the same people. But what happens to the original partnership?

Effect of incorporating a general partnership

In the case of a general partnership, the effect of transferring the business out means that the partnership ceases to exist. For the purposes of the Partnership Act 1890, s. 1(1), a partnership is the relationship between persons carrying on a business together with a view to profit. If the business has been transferred to a company, there is no business being carried on by the original partners, so the partnership must cease to exist.

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