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51 49 Partnership Agreement for Philippines

51 49 Partnership Agreement Template for Philippines

A 51/49 Partnership Agreement under Philippine law establishes a business partnership where the Filipino partner holds a 51% majority stake and the foreign partner holds a 49% minority stake, ensuring compliance with Philippine foreign ownership restrictions. The agreement details the partners' rights, responsibilities, capital contributions, profit-sharing arrangements, management structure, and decision-making processes while maintaining adherence to the Foreign Investments Act of 1991 and related Philippine regulations. This structure is commonly used to facilitate foreign investment while maintaining Filipino control in sectors not fully liberalized for foreign ownership.

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What is a 51 49 Partnership Agreement?

The 51/49 Partnership Agreement is a crucial legal instrument used in the Philippines when establishing business partnerships between Filipino and foreign entities. This document is specifically designed to comply with Philippine foreign ownership restrictions while facilitating foreign investment and expertise. It's particularly relevant when foreign investors wish to enter the Philippine market in sectors where 100% foreign ownership is not permitted. The agreement carefully balances Filipino control (51% ownership) with foreign participation (49% ownership), detailing capital contributions, management rights, profit sharing, and operational control mechanisms. Common applications include manufacturing, retail, professional services, and other sectors where foreign ownership is regulated. The document must strictly adhere to the Foreign Investments Act, Anti-Dummy Law, and other relevant Philippine legislation to ensure legal compliance while protecting both partners' interests.

What sections should be included in a 51 49 Partnership Agreement?

1. Parties: Identification of the partners, including full legal names, addresses, and citizenship

2. Background: Context of the partnership formation and brief description of the business purpose

3. Definitions: Key terms used throughout the agreement

4. Partnership Structure: Details of ownership split (51/49), capital contributions, and compliance with Philippine ownership requirements

5. Business of the Partnership: Scope and nature of partnership business activities

6. Capital Contributions: Initial and subsequent capital contributions, valuation methods, and timing

7. Management and Control: Management structure, voting rights, and decision-making processes

8. Partners' Rights and Obligations: Detailed responsibilities and rights of each partner

9. Financial Matters: Profit sharing, losses, accounting practices, and distribution policy

10. Transfer Restrictions: Limitations on transfer of partnership interests and maintaining Filipino ownership requirements

11. Term and Termination: Duration of partnership and grounds for termination

12. Dispute Resolution: Process for resolving conflicts between partners

13. Governing Law: Application of Philippine law and jurisdiction

14. General Provisions: Standard boilerplate clauses including notices, amendments, and severability

What sections are optional to include in a 51 49 Partnership Agreement?

1. Non-Competition: Restrictions on partners engaging in competing businesses, used when partners have other business interests

2. Intellectual Property: IP ownership and usage rights, included when the partnership involves significant IP assets

3. Employment of Partners: Terms for partners' employment in the business, used when partners will have operational roles

4. Insurance: Required insurance coverage, included for high-risk businesses or regulatory requirements

5. Anti-Corruption Compliance: Anti-bribery and corruption provisions, important for regulated industries or government contracts

6. Force Majeure: Provisions for unforeseen circumstances, particularly relevant in volatile business environments

7. Tag-Along/Drag-Along Rights: Exit mechanisms for minority protection, used in more sophisticated partnership structures

What schedules should be included in a 51 49 Partnership Agreement?

1. Schedule 1 - Initial Capital Contributions: Detailed breakdown of each partner's initial capital contributions

2. Schedule 2 - Business Plan: Initial business plan and financial projections

3. Schedule 3 - Reserved Matters: List of decisions requiring special majority or unanimous consent

4. Schedule 4 - Management Structure: Organizational chart and management responsibilities

5. Schedule 5 - Deed of Adherence: Template for admitting new partners

6. Appendix A - Share Certificate Template: Format for partnership interest certificates

7. Appendix B - Valuation Methodology: Agreed methods for valuing partnership interests

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

Philippines

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions













































Clauses








































Relevant Industries

Manufacturing

Technology Services

Retail

Construction

Tourism

Agriculture

Business Process Outsourcing

Export Trading

Professional Services

Logistics

Food and Beverage

Real Estate Development

Relevant Teams

Legal

Corporate Secretarial

Finance

Compliance

Risk Management

Business Development

International Operations

Corporate Strategy

Investment

Executive Leadership

Relevant Roles

Chief Executive Officer

Managing Director

Business Development Manager

Legal Counsel

Chief Financial Officer

Corporate Secretary

Investment Manager

Operations Director

Compliance Officer

Risk Manager

Partnership Manager

International Business Director

Business Owner

Entrepreneur

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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