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Sakshi Tuteja (Consultant)     30 November 2021

Partnership agreement where one partner wants share in profit but cant contribute in capital

I want to draft a partnership agreement between two persons for starting a manufacturing business. Partner A will provide technical know-how and will be responsible for operations of the business. Partner B will invest the funds required upto 100% and will provide factory/manufacturing plant . Partner A will be entitled for 15% profit from the said business and will also receive salary amounting to 1.5 lakh per annum. Partner B will get 85% of remaining profit from the business. I need advise on below points-

Q1. Whether there can be a capital clause where full 100% profit is invested by one partner and other partner is contributing technical knowledge and his service.

Q2. If I draft such agreement and get it executed then in future if both partners want to register LLP/Pvt Lt company, how will registration happen? Will there be any problem in submission of LLP form online if only one partner is contributing money and other is contribution knowledge?

Q3. How shall I draft Dissolution clause, as partner A wants to reinvest his share in business and at the time of dissolution he wants his accumulated share from the business.

Q4. Also suggest other clauses which can be included in the agreement to protect the interest of both the parties.



 3 Replies

DR.VEDULA GOPINATH (ADVOCATE AND CORPORAE ADVISOR)     30 November 2021

It is possible that one partner can contribute capital other than cash. 

In the case of companies in respecst of technical know-how the company allots shares in lieu of cash by a separate agreement. Thus by way of partners inter-se agreement, the same method can be followed. 

 

cs dr vedula gopinath

advocate/arbittator

vgnath@gmail.com

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 )     30 November 2021

In business and partnership law, contribution may refer to a capital contribution, which is an amount of money or assets given to a business or partnership by one of the owners or partners. The capital contribution increases the owner or partner's equity interest in the entity.

Sakshi Tuteja (Consultant)     01 December 2021

Dear Members, please advise how shall I proceed in this case. Can there be partnership agreement without capital clause? or shall I try other options like getting - service agreement or technology purchase agreement etc.

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