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Profit Sharing Ratio Partnership Agreement for Philippines

Profit Sharing Ratio Partnership Agreement Template for Philippines

A comprehensive legal agreement governed by Philippine law that establishes and regulates a partnership arrangement between two or more parties, specifically focusing on the ratio and mechanism for sharing profits among partners. The agreement details capital contributions, profit-sharing formulas, management responsibilities, and operational procedures while ensuring compliance with the Civil Code of the Philippines and relevant business regulations. It provides a clear framework for financial distributions, partner obligations, and business operations while protecting all parties' interests through detailed provisions for dispute resolution and partnership evolution.

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What is a Profit Sharing Ratio Partnership Agreement?

The Profit Sharing Ratio Partnership Agreement is essential for businesses in the Philippines where multiple parties wish to formalize their partnership arrangement with specific emphasis on how profits will be distributed. This document is particularly crucial when partners contribute different amounts of capital, expertise, or resources, necessitating a clear and legally binding framework for profit allocation. The agreement must comply with the Civil Code of the Philippines (Republic Act No. 386) and related business regulations, while addressing key aspects such as capital contributions, management rights, operational procedures, and profit distribution mechanisms. It's commonly used in both new partnership formations and restructuring of existing partnerships, providing essential protection for all parties through clear delineation of rights, responsibilities, and financial entitlements.

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

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

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

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

4. Partnership Formation: Declaration of partnership formation, business name, and commencement date

5. Business Purpose: Detailed description of the partnership's business activities and objectives

6. Capital Contributions: Details of initial and subsequent capital contributions by each partner

7. Profit and Loss Sharing: Specific ratios and mechanisms for sharing profits and losses

8. Management and Control: Partnership management structure and decision-making processes

9. Partners' Rights and Obligations: Detailed rights, duties, and responsibilities of all partners

10. Banking and Financial Matters: Banking arrangements, accounting practices, and financial management

11. Duration and Term: Partnership duration and renewal terms

12. Termination and Dissolution: Conditions and procedures for partnership termination

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

14. Dispute Resolution: Procedures for resolving disputes between partners

15. Notices: Process for giving formal notices under the agreement

16. General Provisions: Miscellaneous legal provisions including severability and entire agreement

What sections are optional to include in a Profit Sharing Ratio 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 creation or use of intellectual property

3. Insurance: Partnership insurance requirements, included for high-risk businesses or when required by law

4. Admission of New Partners: Procedures for admitting new partners, included when future expansion is anticipated

5. Death or Incapacity: Specific provisions for handling partner death or incapacity, important for family businesses or long-term partnerships

6. Confidentiality: Detailed confidentiality obligations, included when dealing with sensitive business information

7. Assignment and Transfer: Rules for transferring partnership interests, included when transfers might be contemplated

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

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

2. Schedule B - Profit Sharing Ratios: Detailed calculations and conditions for profit sharing arrangements

3. Schedule C - Partner Information: Complete partner details including contact information and tax identification

4. Schedule D - Business Plan: Initial business plan and operational framework

5. Schedule E - Banking Arrangements: Details of partnership bank accounts and authorized signatories

6. Appendix 1 - Financial Procedures: Detailed procedures for financial management and reporting

7. Appendix 2 - Management Structure: Organizational chart and management responsibilities

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

Manufacturing

Real Estate

Food and Beverage

Technology

Agriculture

Construction

Healthcare

Consulting

Trading

Tourism and Hospitality

Relevant Teams

Legal

Finance

Corporate Governance

Executive Leadership

Business Development

Operations

Compliance

Risk Management

Corporate Affairs

Relevant Roles

Business Owner

Managing Partner

Chief Executive Officer

Chief Financial Officer

Legal Counsel

Business Development Manager

Corporate Lawyer

Partnership Manager

Operations Director

Finance Director

Company Secretary

Compliance Officer

Managing Director

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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