K. Zografou - Statutory Configurations of the Right to Claim the Corporate Share by a Departing Partner in a General Partnership (G.P.)

Legal insight

June 2025

Katerina Zografou, LL.M.

Summary: The claim of a departing partner in a Greek general partnership (G.P.) for the return of their corporate share constitutes an inalienable right and cannot be excluded through the partnership agreement. This article examines the legal framework governing this claim, analyzes the permissible and impermissible statutory provisions, and presents the relevant case law approach. Special emphasis is placed on the importance of proactively regulating the terms of exit, in order to ensure balance among partners and the sustainability of the partnership.

1. Introduction

The departure of a partner from a general partnership (G.P.) represents a critical juncture in maintaining equilibrium between the uninterrupted continuation of business operations and the protection of the rights of the departing partner. The departing partner has a rightful claim to receive the full value of their corporate participation, including their share in the profits accrued up to the time of departure.

This claim, although subject to statutory regulation in terms of method and timing of its satisfaction, is not freely negotiable, as it constitutes an essential component of corporate participation. The purpose of this article is to highlight the legal and functional framework of partnership agreement clauses regulating such claims, through the lens of legislation, case law, and business practice.

2. Departure of a Partner: Right to Compensation and Statutory Clauses

2.1 The Core of Corporate Participation and the Nature of the Claim

Participation in a personal company, such as a general partnership, is based on trust, cooperation, and joint action. The partner is not limited to financial contribution but actively engages in the operation of the enterprise and shares both profits and risks.

A fundamental principle of personal company law is the so-called "core of corporate participation." This encompasses corporate rights which are either:

• Relatively inalienable, meaning they can be limited or waived with the consent of the affected partner, or

• Absolutely inalienable, meaning they cannot be waived or excluded even with the partner's consent or through partnership agreement provisions.

Among the absolutely inalienable corporate rights is the departing partner’s claim to receive the full economic value of their corporate share as it stands at the time of departure. This includes not only the initial contribution but also the proportionate share in net profits and accumulated assets during their participation.

Any attempt to exclude this claim—either expressly or implicitly—through a clause in the partnership agreement is legally void. The partner’s consent to such a clause does not cure the legal defect, as it violates the core of the corporate relationship. Such clauses are rejected by courts and are deemed as nonexistent.

The only legal exception allowing the exclusion of this claim is provided under Article 261(3) of Law 4072/2012, in cases where a partner withdraws prematurely and without just cause from a partnership with a predetermined duration. Even in that case, judicial intervention is required to assess whether a valid reason for withdrawal was lacking.

2.2 Permissible Statutory Provisions

Although exclusion of the claim is impermissible, the law permits the partners to regulate how, when, and in what manner the claim is satisfied. Permissible statutory provisions are those that do not alter the essential content of the right, and that promote legal certainty, liquidity, and operational continuity.

Provisions that effectively nullify the claim—either directly or indirectly—are not accepted, even if justified under the principle of contractual freedom.

Indicative examples of permissible statutory clauses include:

• Book value-based share valuation: The corporate share is valued according to the company’s accounting records, typically based on the latest balance sheet, excluding any potential goodwill.
• Goodwill exclusion clause: Excludes the departing partner’s claim to a portion of the company’s goodwill or customer base, thereby reducing the compensation amount.
• Installment payments: Allows compensation to be paid in agreed-upon installments, to ease the company's cash flow.
• Deferred payment due to liabilities: Provides for the postponement of payment if immediate compensation endangers the company’s solvency or ongoing operations.
• Fixed exit compensation (exit clause): Predetermines a specific, often lower, amount as compensation for withdrawal, regardless of actual share value.
• Default interest clause: Imposes interest in case of delayed compensation payment, to protect the departing partner from undue delay.

2.3 Judicial Review and Abuse of Clauses

Greek courts consistently rule that clauses excluding the right to compensation are null and void. Provisions stipulating zero compensation or subjecting payment to the discretion of remaining partners without an objective framework are considered contrary to good faith and partner equality.

In contrast, courts uphold partnership agreement clauses that:

• Objectively and clearly determine the value of the departing partner’s share;

• Allow reasonable payment delays or installments to safeguard liquidity;

• Ensure legal certainty and business continuity.

Proactive regulation of these matters significantly contributes to avoiding conflict and litigation, which can paralyze small and medium-sized partnerships.

3. Conclusion

A partner’s departure from a general partnership should neither destabilize the company nor result in injustice to the departing partner. A clear, foresighted, and balanced statutory regulation of the associated claim is a crucial tool for avoiding disputes, preserving operational stability, and fostering trust among partners. It is therefore imperative that partners draft exit clauses reflecting their company’s specific circumstances, ensuring fairness and predictability.