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Profit Sharing Agreement In Business Partnership for Philippines

Profit Sharing Agreement In Business Partnership Template for Philippines

A comprehensive legal document governed by Philippine law that establishes the terms and conditions for profit sharing between business partners in a partnership arrangement. This agreement outlines the distribution of profits and losses, capital contributions, management responsibilities, and partner obligations in accordance with the Civil Code of the Philippines and relevant commercial legislation. It includes specific provisions for profit calculation, distribution periods, accounting requirements, and dispute resolution mechanisms, while ensuring compliance with Philippine tax regulations and business partnership laws.

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What is a Profit Sharing Agreement In Business Partnership?

The Profit Sharing Agreement In Business Partnership is a crucial document for businesses operating in the Philippines that wish to formalize their profit distribution arrangements. This agreement is essential when two or more parties decide to enter into a business partnership and need to clearly define how profits and losses will be shared. It must comply with the Civil Code of the Philippines, particularly Articles 1767-1867 governing partnerships, and the National Internal Revenue Code for tax implications. The document is commonly used when establishing new partnerships, restructuring existing ones, or adding new partners to an established business. It addresses key aspects such as capital contributions, profit calculation methodologies, distribution schedules, management rights, and partner responsibilities, while considering Philippine-specific legal requirements and business practices.

What sections should be included in a Profit Sharing Agreement In Business Partnership?

1. Parties: Identification and details of all partners entering into the agreement

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

3. Definitions: Clear definitions of key terms used throughout the agreement

4. Partnership Structure: Legal form of partnership and ownership percentages

5. Capital Contributions: Details of initial and ongoing capital contributions from each partner

6. Profit and Loss Distribution: Formula and mechanisms for calculating and distributing profits and losses

7. Management and Control: Decision-making processes and management responsibilities

8. Banking and Financial Records: Requirements for maintaining financial records and handling banking matters

9. Accounting Period and Distributions: Timing and frequency of profit distributions and accounting requirements

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

11. Term and Termination: Duration of agreement and conditions for termination

12. Dispute Resolution: Procedures for resolving disagreements between partners

13. Governing Law: Specification of Philippine law as governing law and jurisdiction

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

What sections are optional to include in a Profit Sharing Agreement In Business Partnership?

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

2. Intellectual Property Rights: Ownership and usage of IP within the partnership, included when the business involves significant IP assets

3. Foreign Ownership Provisions: Special provisions required when foreign partners are involved, addressing compliance with Philippine foreign ownership restrictions

4. Death or Incapacity: Procedures in case of death or incapacity of partners, particularly important for family businesses or smaller partnerships

5. Buy-Sell Provisions: Mechanisms for partners to buy out others' interests, important for larger or more complex partnerships

6. Additional Capital Calls: Procedures for requesting additional capital from partners, relevant for businesses anticipating future capital needs

7. Silent Partner Provisions: Special terms for any silent partners, used when some partners are purely investors

What schedules should be included in a Profit Sharing Agreement In Business Partnership?

1. Schedule A - Initial Capital Contributions: Detailed breakdown of each partner's initial capital contributions, including valuations of non-cash contributions

2. Schedule B - Profit Sharing Formula: Detailed calculations and examples of how profits will be distributed

3. Schedule C - Management Structure: Organizational chart and detailed management responsibilities

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

5. Schedule E - Partner Contact Information: Detailed contact information and notice requirements for all partners

6. Appendix 1 - Financial Reporting Templates: Standard formats for required financial reports

7. Appendix 2 - Meeting Procedures: Detailed procedures for partner meetings and voting processes

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

Professional Services

Retail and Commerce

Manufacturing

Information Technology

Real Estate

Food and Beverage

Construction

Agriculture

Healthcare

Education

Consulting

Tourism and Hospitality

Financial Services

Creative Industries

Import/Export

Relevant Teams

Legal

Finance

Accounting

Corporate Governance

Tax

Compliance

Business Development

Operations

Administrative

Executive Leadership

Relevant Roles

Business Owner

Managing Partner

Chief Executive Officer

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Business Development Manager

Accountant

Tax Consultant

Partnership Administrator

Operations Manager

Company Secretary

Investment Manager

Compliance Officer

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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