Partnership Agreement or Partnership Deed as referred by some is one of the most important documents for any business.
This document is more important if you are doing business in a country which requires you to have a local partner compulsorily. To be able to do business in such countries, investors usually take a partner for the namesake whom they pay a monthly remuneration etc., but on records, that person holds real shares and he is a real partner.
Last week while having a discussion with a client, we came to know of an incident where a person was thrown out of the business which he nurtured and grew a profitable business. He was promised 15% of the monthly profits along with a monthly salary. He was so confident of this deal that he asked his wife as well to leave the job and help the business grow. Ultimately, when everything was settled down, he was kicked out of the business. We asked what about the partnership agreement and came the shocking reply, “they never signed an agreement because they were good friends”.
Money is something which can change a lot of people and people will do anything to have more and more of it. Even if that means cheating their own friends or family members. When we do business, we always sign an agreement and in case we don’t sign we always keep this in mind that in future we might get nothing.
Therefore, if you are going to have a business which needs you to give shares to someone without them having to do nothing and zero sure to sign an agreement otherwise better not to do any such business which needs a partner.