A general partnership (VOF) is a popular legal structure for entrepreneurs starting a business together. While a partnership agreement isn't mandatory, it's highly recommended to put clear agreements in writing. This prevents conflicts and ensures smooth collaboration.
What is a partnership agreement?
A partnership agreement is a legal document in which partners agree on business operations, profit distribution, and other important matters within the partnership. Without an agreement, the statutory rules of the Dutch Civil Code (Article 7A:1655 et seq.) apply, but these are often too general and offer less protection.
What should be included in the agreement?
1. Partner details
- Names, addresses and personal details of all partners.
- The name and address of the partnership.
2. Purpose of the partnership
- A clear description of the business activities.
- Any future plans and growth strategies.
3. Contribution of the partners
- Financial contribution: how much money does each partner contribute?
- Material input: for example equipment or a business premises.
- Labor input: who works how many hours per week?
4. Profit and loss distribution
- How are profits distributed? Often in proportion to the contribution.
- How are losses absorbed? For example, through reserves or additional deposits.
5. Powers and decision-making
- Which decisions can partners make independently?
- Which decisions require joint approval?
- How are conflicts resolved when partners disagree?
6. Liability
- Partners are jointly and severally liable for the debts of the partnership.
- Clear agreements on how financial risks are managed.
7. Admission and withdrawal of partners
- What happens if a partner wants to withdraw?
- How is a new partner admitted?
- Agreements regarding the sale or transfer of shares in the partnership.
8. Illness, disability and death
- What happens if a partner becomes ill for a long period of time?
- How does the company continue if a partner dies?
9. Dissolution of the partnership
- Under what conditions is the partnership terminated?
- How are assets and debts divided upon dissolution?
Why is a collaboration agreement important?
- Prevent conflicts through clear agreements.
- Protects partners in the event of illness, departure or bankruptcy.
- Regulates the distribution of profits, powers and liability.
A legal advisor can help draw up a sound agreement so that all partners are well protected.
Conclusion
A partnership agreement is essential for preventing misunderstandings and legal issues. Clearly document agreements regarding contributions, profit sharing, liability, and exit to ensure a smooth collaboration.
