My business partner and I have fallen out. Can the court dissolve our partnership and order accounts?

Many small Malaysian businesses are partnerships registered with SSM: a café, a contractor, a clinic, a trading firm. When partners fall out, there is no board or share register to fall back on. The Partnership Act 1961 and the court's powers to order accounts fill the gap.

How a partnership ends

• By agreement: the partners agree to dissolve, ideally in writing with a plan for assets and debts.
• By notice: a partnership at will, with no fixed term, can generally be ended by notice from a partner.
• By the terms: a fixed-term or single-venture partnership ends when the term or venture ends.
• By certain events: such as the death or bankruptcy of a partner, subject to the agreement.
• By court order: where a partner applies to court.

Check your partnership agreement first; it may set out notice periods, buy-out terms or arbitration.

When the court may dissolve

The Partnership Act 1961 sets out grounds on which the court may order dissolution, including where a partner:

• becomes permanently incapable of performing their part;
• is guilty of conduct likely to prejudicially affect the business;
• wilfully or persistently breaches the partnership agreement, or behaves so that it is not reasonably practicable to carry on with them;

and where the business can only be carried on at a loss, or the court thinks it just and equitable.

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Taking accounts

Partners must account to each other for partnership property, income and profits, and for benefits obtained from partnership business. Where a claim involves taking an account, the court can make a summary order for an account under Order 43 of the Rules of Court 2012. The account shows capital contributions, drawings, profits, debts and what each partner is owed.

Protecting assets during the dispute

Where a partner is taking money, customers or equipment, the court can grant interim injunctions, appoint a receiver in suitable cases, or order preservation of property. See also a partner who took money.

After dissolution

Partnership property is applied to pay debts, then to repay partners' advances and capital, and any surplus is shared according to their entitlements. Partners can remain liable to outside creditors for debts incurred while they were partners, so notify suppliers and banks.

Not a partnership?

If the business is a company, shareholder remedies apply; see just and equitable winding up. If it is a limited liability partnership (LLP), a separate Act applies.

Example

Two partners run a Taiping hardware shop. One stops coming in, but keeps drawing money and opens a rival shop nearby. The other applies to court for dissolution, an account of partnership dealings since the rival shop opened, and an injunction restraining use of the partnership's supplier accounts.

Common mistakes

• Having no written agreement.
• Taking partnership stock or cash "to protect it".
• Not notifying customers and suppliers after dissolution.
• Forgetting personal liability for partnership debts.

When to speak to a lawyer

When a partnership dispute threatens the business or its assets. See civil litigation or contact us.

Frequently asked questions

Do I need to go to court to dissolve?

Not always. If the partnership is at will or the partners agree, it can end without court. Court is needed when there is disagreement on grounds or accounts.

Can my partner keep the business name?

That depends on the agreement and on goodwill. It may need to be valued and dealt with in the dissolution.

Is a verbal partnership valid?

Yes, a partnership can exist without a written agreement, but proving its terms is harder.

Sources & fact check

Legal points in this article were checked against the primary sources below. The law can change; this is general information, not legal advice.

1. Partnership Act 1961 (Act 135), AGC Laws of Malaysia
2. Rules of Court 2012 (P.U.(A) 205/2012), text published by the Malaysian Bar, including Orders 12, 13, 18, 19 and 93

Fact-checked on 17 Oct 2026