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Profit Sharing Agreement Template for Singapore

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Key Requirements PROMPT example:

Profit Sharing Agreement

"I need a Profit Sharing Agreement under Singapore law for a tech startup with three co-founders, where we want to split profits 40-30-30, including quarterly distribution and detailed reporting requirements, starting from January 2025."

Document background
A Profit Sharing Agreement is essential when multiple parties wish to formalize their arrangement for sharing business profits. This document, governed by Singapore law, specifically details how profits will be calculated, distributed, and managed among the participating parties. The agreement typically includes provisions for financial reporting, audit rights, and dispute resolution mechanisms. It's particularly important for businesses operating in Singapore's commercial environment, where clear documentation of profit-sharing arrangements is crucial for both legal compliance and tax purposes. The agreement helps prevent future disputes by clearly establishing each party's rights and obligations.
Suggested Sections

1. Parties: Identification and details of all parties involved in the profit sharing arrangement

2. Background: Context and purpose of the profit sharing arrangement

3. Definitions: Key terms used throughout the agreement including profit calculation methods, accounting periods, and relevant financial terms

4. Profit Calculation: Method and basis for calculating distributable profits, including accounting principles to be applied

5. Distribution Mechanism: Process and timing of profit distributions, including profit sharing ratios and payment procedures

6. Payment Terms: Details of how and when payments will be made, including payment methods and currency

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

8. Governing Law: Specification of Singapore law as governing law and jurisdiction for disputes

Optional Sections

1. Non-Competition: Restrictions on competitive activities during and after the profit sharing arrangement

2. Intellectual Property: Rights and ownership of intellectual property related to the profit-generating activities

3. Confidentiality: Obligations regarding protection and non-disclosure of confidential information

4. Assignment: Provisions regarding the transfer or assignment of profit sharing rights and obligations

Suggested Schedules

1. Schedule 1 - Profit Calculation Formula: Detailed methodology and formulas for calculating distributable profits

2. Schedule 2 - Payment Schedule: Timing and frequency of profit distributions throughout the term

3. Schedule 3 - Excluded Costs: Comprehensive list of costs and expenses excluded from profit calculations

4. Schedule 4 - Reporting Requirements: Format, content, and frequency of financial reports and statements

Authors

Alex Denne

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

Relevant legal definitions


























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Industries

Companies Act (Cap. 50): Primary legislation governing corporate entities in Singapore, including provisions for corporate governance, directors' duties, and shareholder rights

Partnership Act (Cap. 391): Legislation governing partnership arrangements and profit sharing between partners in Singapore

Income Tax Act (Cap. 134): Tax legislation relevant for profit sharing arrangements, including treatment of distributions and withholding obligations

Contract Law (Cap. 43): Fundamental legislation governing contract formation, validity, and enforcement in Singapore

Employment Act (Cap. 91): Legislation governing employment relationships, relevant if profit sharing involves employees

Central Provident Fund Act: Legislation governing mandatory social security savings, potentially applicable to profit sharing payments to employees

Directors' Duties: Legal obligations of directors under Singapore law when implementing profit sharing arrangements

Tax Compliance Requirements: Various tax considerations including GST, withholding tax, and proper treatment of profit sharing payments

Contract Formation Requirements: Essential elements for valid contracts: clear terms, consideration, capacity, and legal purpose

MAS Regulations: Monetary Authority of Singapore regulations applicable to profit sharing in financial services sector

Dispute Resolution Framework: Legal framework for resolving disputes including litigation, mediation, and alternative dispute resolution options

Mediation Act: Legislation governing mediation processes in Singapore for dispute resolution

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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