Sample Partnership Agreement
Here is a sample partnership agreement for a typical Investment Club [Download
MS Word .doc]
of PARTNERSHIP, effective as of BEGINNING DATE, by and between the undersigned,
[Insert Names Here]
NOW, THEREFORE IT IS AGREED:
- Formation. The undersigned
hereby form a General Partnership in accordance with and subject to
the laws of the State of ____.
- Name. The name of
the partnership shall be (Name of Club) Investment Club.
- Term. The partnership
shall begin on BEGINNING DATE and shall continue until December 31 of
the same year and thereafter from year to year unless earlier terminated
as hereinafter provided.
- Purpose. The only
purpose of the partnership is to invest the assets of the partnership
solely in stocks, bonds and other securities ("securities")
for the education and benefit of the partners.
- Meetings. Periodic
meetings shall be held as determined by the partnership.
- Capital Contributions.
The partners may make capital contributions to the partnership on the
date of each periodic meeting in such amounts as the partnership shall
determine, provided, however, that no partner's capital account shall
exceed twenty-five percent (25%) of the capital accounts of all partners.
- Value of the Partnership.
The current value of the assets of the partnership, less the current
value of the liabilities of the partnership, (hereinafter referred to
as the "value of the partnership") shall be determined as
of a regularly scheduled date and time ("valuation date")
preceding the date of each periodic meeting determined by the Club.
- Capital Accounts.
A capital account shall be maintained in the name of each partner. Any
increase or decrease in the value of the partnership on any valuation
date shall be credited or debited, respectively, to each partner's capital
account on that date. Any other method of valuating each partner's capital
account may be substituted for this method, provided the substituted
method results in exactly the same valuation as previously provided
herein. Each partner's contribution to, or capital withdrawal from,
the partnership shall be credited, or debited, respectively, to that
partner's capital account.
- Management. Each
partner shall participate in the management and conduct of the affairs
of the partnership in proportion to his capital account. Except as otherwise
determined, all decisions shall be made by the partners whose capital
accounts total a majority of the value of the capital accounts of all
- Sharing of Profits
and Losses. Net profits and losses of the partnership shall inure to,
and be borne by, the partners, in proportion to the value of each of
their capital accounts.
- Books of Account.
Books of account of the transactions of the partnership shall be kept
and at all times be available and open to inspection and examination
by any partner.
- Annual Accounting.
Each calendar year, a full and complete account of the condition of
the partnership shall be made to the partners.
- Bank Account. The
partnership may select a bank for the purpose of opening a bank account.
Funds in the bank account shall be withdrawn by checks signed by any
partner designated by the partnership.
- Broker Account.
None of the partners of this partnership shall be a broker. However,
the partnership may select a broker and enter into such agreements with
the broker as required for the purchase or sale of securities. Securities
owned by the partnership shall be registered in the partnership name
unless another name shall be designated by the partnership.
or transfer agent called upon to transfer any securities to or from
the name of the partnership shall be entitled to rely on instructions
or assignments signed by any partner without inquiry as to the authority
of the person(s) signing such instructions or assignments, or as to
the validity of any transfer to or from the name of the partnership.
time of a transfer of securities, the corporation or transfer agent
is entitled to assume (1) that the partnership is still in existence
and (2) that this Agreement is in full force and effect and has not
been amended unless the corporation has received written notice to the
- No Compensation.
No partner shall be compensated for services rendered to the partnership,
except reimbursement for expenses.
- Additional Partners.
Additional partners may be admitted after the first six months of operation,
upon the unanimous consent of the partners, so long as the number of
partners does not exceed twenty-five (25).
Transfers to a Trust. A partner may, after giving written notice to
the other partners, transfer his interest in the partnership to a revocable
living trust of which he is the grantor and sole trustee.
Removal of a Partner. Any partner may be removed by agreement of the
partners whose capital accounts total a majority of the value of all
partners' capital accounts. Written notice of a meeting where removal
of a partner is to be considered shall include a specific reference
to this matter. The removal shall become effective upon payment of the
value of the removed partner's capital account, which shall be in accordance
with the provisions on full withdrawal of a partner noted in paragraphs
18 and 20. The vote action shall be treated as receipt of request for
- Termination of
Partnership. The partnership may be terminated by agreement of the partners
whose capital accounts total a majority in value of the capital accounts
of all the partners. Written notice of a meeting where termination of
the partnership is to be considered shall include a specific reference
to this matter. The partnership shall terminate upon a majority vote
of all partners' capital accounts. Written notice of the decision to
terminate the partnership shall be given to all the partners. Payment
shall then be made of all the liabilities of the partnership and a final
distribution of the remaining assets either in cash or in kind, shall
promptly be made to the partners or their personal representatives in
proportion to each partner's capital account.
- Voluntary Withdrawal
(Partial or Full) of a Partner. Any partner may withdraw a part or all
of the value of his capital account in the partnership and the partnership
shall continue as a taxable entity.
withdrawing a part or all of the value of his capital account shall
give notice of such intention in writing to the Secretary. Written notice
shall be deemed to be received as of the first meeting of the partnership
at which it is presented. If written notice is received between meetings
it will be treated as received at the first following meeting. Withdrawal
may only take place after the first six months of partnership operation.
payment, the value of the partnership as set forth in the valuation
statement prepared for the first meeting following the meeting at which
notice is received from a partner requesting a partial or full withdrawal,
will be used to determine the value of the partner's account.
shall pay the partner who is withdrawing a portion or all of the value
of his capital account in the partnership in accordance with paragraph
20 of this Agreement.
- Death or Incapacity
of a Partner. In the event of the death or incapacity of a partner (or
the death or incapacity of the grantor and sole trustee of a revocable
living trust, if such trust is partner pursuant to Paragraph 16A hereof),
receipt of notice shall be treated as a notice of full withdrawal.
- Terms of Payment.
In the case of a partial withdrawal, payment may be made in cash or
securities of the partnership or a mix of each at the option of the
partner making the partial withdrawal. In the case of a full withdrawal,
payment may be made in cash or securities or a mix of each at the option
of the remaining partners. In either case, where securities are to be
distributed, the remaining partners select the securities.
The partnership shall transfer to the partner (or other appropriate entity) withdrawing a portion or all of his interest in the partnership, an amount equal to the value of the capital account being withdrawn, less any actual expenses to the partnership related to the withdrawal. Payment may be made by transferring cash or securities or both. The value of securities transferred shall be as shown on the Club's valuation statement prepared to determine the value of that partner's capital account in the partnership and securities shall be transferred as of the date of that valuation statement (the "withdrawal valuation date"). The Club's broker shall be advised that ownership of the securities has been transferred to the partner as of the withdrawal valuation date. Cash shall be paid within 10 business days after the withdrawal valuation date.
partner withdrawing a portion or all of the value of his capital account
in the partnership desires an immediate payment in cash, the partnership
at its earliest convenience may pay eighty percent (80%) of the estimated
value of his capital account and settle the balance in accordance with
the valuation and payment procedures set forth in items 18 and
- Forbidden Acts: No partner shall:
the right or authority to bind or obligate the partnership to any extent
whatsoever with regard to any matter outside the scope of the partnership
as provided in paragraph 16A, without the unanimous consent of all the
other partners, assign, transfer, pledge, mortgage or sell all or part
of his interest in the partnership to any other partner or other person
whomsoever, or enter into any agreement as the result of which any person
or persons not a partner shall become interested with him in the partnership.
an investment for the partnership where less than the full purchase
price is paid for same.
the partnership name, credit or property for other than partnership
any act detrimental to the interests of the partnership or which would
make it impossible to carry on the business or affairs of the partnership.
of Partnership shall be binding upon the respective heirs, executors,
administrators and personal representatives of the partners.
have caused this Agreement of Partnership to be executed on the dates
indicated below, effective as of the date indicated above.
SIGN AND DATE