Section 28 of the Partnership Act 1890 provides:
“Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or his legal representatives.”
The extent of one partner’s ability to inspect a document was considered in the recent case of Inversiones Frieira SL, Inversiones Valea SL v Colyzeo Investors II LP, Colyzeo Investment Management Limited. [2012] EWHC 1450 (Ch).
In that case the Court considered the extent of the duty and what rights a limited partner had to inspect documents. The case also gave some general advice as to constitutes partnership books.
The question in this case was over the extent of inspection afforded to a limited partner. This is slightly narrower than a “normal” partnership and the extent of the duties are dealt with by common law, the Partnership Act 1890 and the Limited Partnership Act 1907, Section 6.
In summary:-
A limited partner can inspect the partnership books.
The agenda and minutes of the partnership advisory committee were considered to be partnership documents, though presentations or documents referred to in the agenda or minutes did not constitute partnership “books", simply because they are mentioned in the documents.
In general, if it is necessary for a general partner to rely on a document to establish / determine rights against a third party then such a document would be a partnership document.
If a document was paid for by the partners themselves then it would be a partnership document.
The provision of such documents must be appropriate to address real and substantial issues and whatever is provided to one limited partner must be made available to every other limited partner in the partnership.
The right of a limited partner to inspect partnership books is qualified by the corresponding rights of other partners.
Limits
The exercise by a limited partner of the right to inspect partnership documents does not require the general partner to create partnership books not already in existence.
If the general partner had not maintained full books and records (as it ought to have pursuant to a separate obligation to maintain proper books and records) then the limited partners could inspect the primary documentation from which the limited partnership’s books should have been prepared.
Where the documents belong to or are in the possession of company wholly owned by the partnership then, although the general partner will have the power to exercise the partnership’s rights as a shareholder; a limited partner cannot compel the general partner to demand production of such documents. If however, in the course of transacting the business of the partnership, the general partner has obtained copies of any such documents, then such documents are capable (if of a nature and significance to make them part of the books and records of the partnership) of becoming partnership “books".
This case demonstrates that partners are subject to complex duties and the scope of these duties is a complex matter in the event of a dispute. At Benchmark Solicitors, we can advise you on Partnership Law.
Chris Tuckett, Solicitor – 28 February 2013