Partnership Agreements
If you decide to operate your business as a partnership you are well advised to have a Partnership Agreement drawn up. Without one, many disputes or questions may arise, and it will be the Partnership Act 1890 which will have to be the sole reference point. This is very old legislation, and it is often inappropriate for the needs of a modern business.
We can advise you on what type of Partnership Agreement you will require, and will draft it for you making sure the following key issues are all dealt with:
Term of the Partnership
Should the partnership be indeterminate or for a specified period of time?
Nature of the Partnership Business
So that any other new types of business can only be entered into with the unanimous consent of the partners, how is the nature of the business to be defined?
Partnership Name
What are the legal requirements for the name of a partnership?
Income
Precisely how will the profits (and losses) of the business be split? You may have very simple or complex requirements. We can advise on this, and also on how best to ensure that Revenue & Customs do not attempt to class the partners as employees and tax them accordingly.
Capital
What will be the arrangements for the financial input of each partner? Will there be provisions for future investment of capital?
Property
Which property is to be regarded as partnership property and which is to remain the property of individual partners?
Management
What will be the procedures for the general day to day running of the business? Provisions for meetings, voting and all other administrative matters need to be clarified in the Agreement.
Absence/Illness
How will you deal with partners who may be absent for whatever reason for a long period of time, bearing in mind that normal employment law does not cover partners?
Restrictions
Will you place restrictions on partners from working for or setting up competing businesses during their time with the partnership and after they leave? Such clauses are heavily regulated by the law and in order for them to be enforceable you should seek our legal advice.
Disputes
How will disputes be dealt with? Commonly, it is possible to refer matters to a specialist independent mediator. We can advise on this.
New Partners
On what terms can a new partner be introduced? The procedures for introducing that partner should be expressed.
Death or Expulsion
What will happen on the death of a partner? In which circumstances can a partner be expelled? The financial arrangements for either of these scenarios should be expressed. There may also be tax implications. We can advise on all of this.
If you have any enquiries, please contact Paul Warman, Peter Sheppard or Richard Guthrie – or alternatively please call us on 01603 610911.
