Regardless of whether it is a one-man GmbH or a large limited partnership - when setting up a company, a partnership agreement is necessary that regulates the internal relationship between the shareholders, the managing directors and the company. However, the design of the partnership agreement is often underestimated in practice, so that model agreements are often used as templates. From a legal point of view, only the company name, the company headquarters, the object of the company, the share capital and the share contributions must be listed in the partnership agreement. Many societies often just leave it at that. However, in the event of inheritance or changes in the company, conflicts can arise that can end up being very expensive and, in the worst case, ruin your existence. Therefore, the design and content of the partnership agreement should be carefully considered and a specialist lawyer should be consulted. If the partnership agreement already exists, it is advisable to have it checked by a lawyer. As Specialist lawyer for corporate law I would like to summarize below which regulations are important when drafting the partnership agreement in order to prevent conflicts.
What is a social contract?
A partnership agreement (also called articles of association) is the legal basis of a company. When the company is founded, the partners agree on their mutual rights and obligations in the partnership agreement. The aim is to achieve the common corporate purpose.
The partnership agreement is therefore essential for a company to be able to participate in business transactions. In order for a partnership agreement of a GmbH to be valid, it must be notarized and entered in the commercial register.
forms of society
The legal form must be carefully thought through in advance and specified in writing in the partnership agreement. Ultimately, the type of company determines tax advantages and liability. When setting up a company, you should carefully consider whether you should be liable in future disputes with your private or company assets. Depending on the case, both can have advantages and disadvantages. Particularly popular are company forms with limited liability, such as: the GmbH.
Depending on the type of company, there are also different requirements for the partnership agreement. In principle, however, a distinction is made between partnerships and corporations:
1) Articles of association for corporations:
If a capital company, such as a GmbH, is founded, the notarial form is mandatory. The contents of one GmbH partnership agreement The shareholders decide for themselves. The essential content of the statutes of a stock corporation, on the other hand, is largely prescribed by law. In addition, the partnership agreement must be notarized in order for it to be valid. Otherwise the contract is void.
2) Articles of association for partnerships:
Partnerships, such as a general partnership (OHG) or a limited partnership (KG), are not subject to any formal requirements. The partnership agreement can be concluded both in writing and verbally. However, companies would do well to choose the written form here too. In the event of a dispute, the contractual provisions apply.
The shareholder structure
It is also important to specify the shareholder structure precisely in the partnership agreement. The following points should be mentioned:
– Number of shareholders
– Type of shareholders (company or natural person)
– Distribution of shares
In addition, the following questions should be answered:
– Are there plans to take on additional shareholders?
– Is it a family company with several family lines and generations?
– Should there be a minority shareholder? If so, what are its rights and obligations?
Management and representation
The management and external representation of the company should also be explicitly regulated in the partnership agreement. If there is more than one managing director, the partnership agreement should state whether the company is represented by each managing director individually or only jointly by two managing directors. In order to avoid later conflicts, all rights and Duties of the managing directors be listed in the partnership agreement. For example, if there is an advisory board in a family company, its rights and obligations should also be regulated in the partnership agreement. The people who make up this advisory board should not be forgotten.
The succession plan
The succession plan in the event of death must be carefully thought out in advance. Who will be the next shareholder? What happens to the deceased’s business shares? What rights does the executor have? These questions can also be answered in the partnership agreement. If such regulations have not been made in advance in the partnership agreement, this can have a huge impact on the company.
Resignation and transfer of shares
The partnership agreement should also regulate the departure of partners in detail. This means in particular the confiscation of shares or the exclusion of shareholders.
Leaving is often only possible upon payment of severance pay. The amount should definitely already be specified in the partnership agreement. Since severance payments are often paid out in very large quantities and this represents a liquidity risk for the company, the payment method (e.g. payment in installments) must also be mentioned in the partnership agreement. It should also be determined what will happen to the departing partner's shares or to whom they will be transferred.
The Arbitration Court
The partnership agreement can also specify whether, in the event of a conflict between the partners, there will be a court case or whether an arbitration tribunal will take up the matter.
In the case of a GmbH, the decision is made shareholders' meeting through a shareholder resolution on changes to the contract. At least three-quarters of the votes must be in favor of the new provisions of the treaty for a change to be considered adopted. In addition, the change must be notarized and entered in the commercial register in order to be effective.
In the case of partnerships, as with their formation, new regulations are not required to be in writing. They could therefore even be done orally. However, it is also advisable to record the content of the change in writing.
If you would like personal advice on drafting the partnership agreement or would like to have a contract checked, please do not hesitate to contact me Law firm andrelang law to contact. I'm happy to help!