The business world is constantly evolving, and modern entrepreneurs are always looking for ways to secure and optimize their businesses. A key tool, often underestimated, which has gained popularity in recent years (especially with the “le nouveau Code des Sociétés et associations” (CSA)) is the “partnership agreement” or shareholders agreement.
But what exactly is it, and why is it so essential ?
What is a partnership agreement ?
A partnership agreement is a contract signed between the partners of a company. While not mandatory, this document complements the company’s articles of association. It specifies the rights and obligations of each partner, as well as the operating and management procedures of the company.
Why opt for a partnership agreement ?
For many good reasons ! 👇
- Clarification of roles and responsibilities : A partnership agreement allows for precisely defining the roles and responsibilities of each partner. This avoids ambiguities and potential conflicts regarding each party’s expectations.
- Conflict prevention : By defining in advance the terms of dispute resolution, the agreement minimizes the risks of misunderstandings and provides a framework for resolving disagreements.
- Protection of minorities : The agreement can offer protections for minority shareholders against any unfair decisions made by the majority.
- Regulation of entries and exits : In the context of business development or restructuring, the partnership agreement defines the conditions under which a partner can sell their shares, as well as the pre-emption rights of other partners. It can ensure a certain stability.
- Confidentiality : Unlike the company’s articles of association, which are public documents, the partnership agreement is a private document. This ensures the confidentiality of arrangements and agreements between partners.
- And, last but not least, flexibility: Businesses evolve, as do their needs. All signatories can agree to modify a partnership agreement (yes, it’s a contract !). This offers flexibility to adapt to the changing dynamics of the company’s business.
What should be included in a partnership agreement ?
Here is a non-exhaustive checklist of clauses to consider in a partnership agreement :
- General clauses : these define the purpose, duration and scope of the partnership agreement.
- Management of the company : these clauses specify how the company will be managed, which decisions require unanimity, and the responsibilities of each partner in the decision-making process.
- Management of associates or shareholders : these clauses define the rights and obligations of associates or shareholders, including their financial contributions, roles and responsibilities, and other aspects related to their participation in the company.
- Company operating procedures : these clauses determine the day-to-day running of the company, including the holding of meetings, decision-making and other operating procedures.
- Associate entry and exit clauses : these define the conditions under which an associate may join or leave the company. They also define the pre-emptive rights of other partners.
- Non-competition clauses : these prevent associates from setting up or joining a competing business for a defined period after leaving the company.
- Confidentiality clauses : oblige partners to keep sensitive company information confidential.
- Dispute resolution : these clauses establish procedures for managing and resolving conflicts between associates.
- Shareholder stability clauses : these can stabilize share ownership by setting specific conditions for the sale or transfer of shares.
- Voting rights clauses : these define how associates allocate and exercise their voting rights.
Conclusion
In conclusion, a partnership agreement is an essential tool for any company with several partners. Not only does it prevent conflicts and clarify expectations, it also provides a solid structure for the company’s growth and evolution.
Have you thought about it? Let’s talk !
