• By Daniel ORGUÉ
• 23-09-2017

Partners Pact: Why?

ANTICIPATE TO PROBLEMS.

One of the fundamental and natural fears or concerns of any entrepreneur who wants to associate with other people to create a company is if those partners are going to be the right people for the project they want to carry out.

The Partners Pact is an agreement signed by all the partners of a commercial company, with the objective of regulating the internal relations within the society, in order to guarantee the resolution of conflicts that can jeopardize the survival of the same.

In this sense, although the Bylaws have to be accompanied by the founding charter of the company, they must be presented to the public through a Notary and registered in the Mercantile Registry, the Partners Pact may be a private document, which is known only to the persons who have signed it, and can be formalized at any time in the life society.

CONTENT OF THE PARTNERS PACT.

The content of the Compact of Partners can be really broad. Usually there are some common issues that are repeated in virtually all companies, but we consider that it is the ideal time to model a tailor made suit for society and partners in question that is effective in resolving potential future conflicts.

And when it comes to negotiating and writing it, it is important to be aware that each business sector is different, that the number of partners, their participation, and their professional relationship is different in each company, that they may be future variables that alter current situations, and very important: the investor is accustomed to the Covenants of Partners, but the entrepreneur generally has never seen any of them and he does not know what they are.

In any case, the common issues to practically the majority of Partners Pacts are: the establishment of the form of administration of the company, and the conditions to be able to be administrator, quorums reinforced in the decision making part of the General Meeting, regulation the entry and exit of company partners, the functions and dedications of each partner, non-competitions clauses, trailing and accompanying rights, etc.

Notwithstanding, we consider it necessary that once the Covenant of Partners has been drafted, the Bylaws are adapted to be consistent with the agreements reached, and to establish that the Covenant of Members will prevail in case of conflict with them.

CONCLUSION.

Having a good Partners Pact can be the difference between success and failure of any business project. In our opinion, it is extremely important that all social relationships are governed by clear, simple and fair rules, negotiated by all parties and embodied in a Partners Pact that must be fulfilled by all Members.

If you need us to write a partner agreement, contact us