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Share Profit Agreement for Hong Kong

Share Profit Agreement Template for Hong Kong

A comprehensive legal document governed by Hong Kong law that establishes and regulates profit-sharing arrangements between two or more parties. The agreement defines the methodology for calculating profits, distribution mechanisms, payment terms, and parties' rights and obligations. It incorporates relevant provisions from Hong Kong's Companies Ordinance and contract law, ensuring compliance with local regulatory requirements while providing a clear framework for profit allocation and dispute resolution. The document includes detailed schedules for calculation methods, distribution timing, and reporting requirements.

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What is a Share Profit Agreement?

The Share Profit Agreement is a crucial document for businesses operating in Hong Kong seeking to formalize profit-sharing arrangements between multiple parties. It is commonly used in joint ventures, strategic partnerships, investment collaborations, and business associations where parties agree to share profits from specific business activities or ventures. The document complies with Hong Kong's legal framework, particularly the Companies Ordinance (Cap. 622) and relevant contract law principles. It typically includes comprehensive provisions for profit calculation, distribution mechanisms, audit rights, and dispute resolution procedures. This agreement is essential when parties want to establish clear, legally binding terms for sharing business profits while maintaining separate legal entities and limiting their cooperation to specific profit-sharing arrangements.

What sections should be included in a Share Profit Agreement?

1. Parties: Identification of all parties entering into the agreement, including their legal names, registration details, and addresses

2. Background: Context of the agreement, business relationship between parties, and purpose of the profit-sharing arrangement

3. Definitions: Detailed definitions of key terms used throughout the agreement, including 'Profits', 'Calculation Period', 'Distribution Date', etc.

4. Profit Calculation: Detailed methodology for calculating distributable profits, including applicable accounting standards and adjustments

5. Profit Distribution: Rules and procedures for profit distribution, including profit-sharing ratios, frequency, and payment methods

6. Payment Terms: Specific terms regarding timing of payments, currency, bank details, and handling of late payments

7. Records and Audit Rights: Requirements for maintaining financial records and rights of parties to audit or review financial information

8. Confidentiality: Obligations regarding confidential information shared between parties

9. Term and Termination: Duration of the agreement and circumstances under which it can be terminated

10. Dispute Resolution: Procedures for resolving disputes, including jurisdiction and governing law

11. General Provisions: Standard legal provisions including notices, amendments, assignment, and severability

What sections are optional to include in a Share Profit Agreement?

1. Non-Competition: Restrictions on parties engaging in competing business activities, used when parties operate in the same industry

2. Intellectual Property: IP ownership and usage rights, needed when the profit-sharing involves IP-generating activities

3. Management Rights: Decision-making powers and management participation rights, important for active business partnerships

4. Exit Provisions: Procedures for party exit, including buyout terms and valuation methods, useful for long-term arrangements

5. Force Majeure: Provisions for handling unforeseen circumstances affecting profit generation or distribution

6. Tax Provisions: Detailed tax handling and allocation between parties, important for cross-border arrangements

7. Change Control: Procedures for handling changes in business operations or profit calculation methods

What schedules should be included in a Share Profit Agreement?

1. Party Information Schedule: Detailed information about parties including authorized representatives and contact details

2. Profit Calculation Formula: Detailed mathematical formulas and examples for profit calculation

3. Distribution Schedule: Timing and procedures for regular profit distributions

4. Excluded Costs and Expenses: List of items to be excluded from profit calculations

5. Accounting Principles: Specific accounting standards and principles to be applied

6. Bank Account Details: Banking information for profit distributions

7. Reporting Template: Standard format for periodic financial reports and profit calculations

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Hong Kong

Publisher

Ƶ

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions









































Clauses






























Relevant Industries

Financial Services

Real Estate Development

Technology and Software

Professional Services

Retail and Distribution

Manufacturing

Entertainment and Media

Healthcare Services

Construction and Infrastructure

Hospitality and Tourism

E-commerce

Consulting Services

Relevant Teams

Legal

Finance

Corporate Development

Commercial

Business Development

Compliance

Operations

Accounting

Investment

Strategy

Partnership Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Finance Director

Legal Counsel

Commercial Director

Business Development Manager

Partnership Manager

Investment Manager

Corporate Development Director

Financial Controller

Compliance Officer

Account Manager

Operations Director

Joint Venture Manager

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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