Partnership PresentationPartnership Rights and Duties Do’s and Don’ts Famous Partnerships Partnership Rights and Duties Do’s and Don’ts Famous Partnerships What is Partnership? Partnership • A single business where two or more persons share ownership • By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Partnership • A partnership must have a lawful object or purpose, and must be established for the common benefit or interest of the partners. • Two or more persons may also form a partnership for the exercise of a profession. Basic Features of a Business Partnership Justo Torres Jr., The Law On Business Organization, p. 6. 2008 Voluntary Agreement There must be a valid, purely voluntary agreement of parties to be partners as no person may be compelled against his will to be a partner. An Association for Profit If the aim of the association is anything other than profit, it is certainly not a partnership. For this reason, associations for charity, civic or social purposes cannot be considered partnerships. Besides, the intention of partners must be to divide the profits. Contribution to a Common Fund The partners must each contribute money, property or industry to a common fund as capital of the business. Real or effective credit, such as promissory note, or other evidence of indebtedness may be contributed as it is considered property. Lawful Purpose As in other kinds of contract, the purpose of a partnership must be lawful and must be established for the common benefit or interest of the partners. Hence, no partnership can arise if the purpose is contrary to law, morals, good customs, public order or public policy. Mutual Agency of Partners A partner is considered the agent of his co-partners and of the firm in respect of all partnership acts. The relationship therefore of the partners is highly fiduciary in character. Articles must not be kept secret All partners are entitled to know the contents of the articles of partnership and each one must be given that opportunity equally with the others. Separate Judicial Personality A partnership organized under the Civil Code acquires a distinct legal personality from the partners and as such it can act as a legal unit. Kinds of Partnership as to Object Particular Partnership One existing where the parties have united to share the benefits of a single individual transaction or enterprise. Black’s Law Dictionary 4th Ed. Rev. Universal Partnership One in which the partners jointly agree to contribute to the common fund of the partnership the whole of their property, of whatever character, and future, as well as present. Black’s Law Dictionary 4th Ed. Rev. Kinds of Partnership as to Liability General Partnerships Assume that profits, liability and management duties are divided equally among partners. If you opt for an unequal distribution, the percentages assigned to each partner must be documented in the partnership agreement. www.sba.gov/content/partnership# General Partnerships Partnership in which the parties carry on all their trade and business, whatever it may be, for the joint benefit and profit of all the parties concerned, whether the capital stock be limited or not, or the contributions thereto be equal or unequal. Black’s Law Dictionary 4th Ed. Rev. Limited Partnerships More complex than general partnerships. Limited partnerships allow partners to have limited liability as well as limited input with management decisions. These limits depend on the extent of each partner’s investment percentage. www.sba.gov/content/partnership# Limited Partnerships A partnership consisting of one or more general partners, jointly and severally responsible as ordinary partners, and by whom the business is conducted, and one or more special partners, contributing in cash payments a specific sum as capital to the common stock, and who are not liable for the debts of the partnership beyond the fund so contributed. Black’s Law Dictionary 4th Ed. Rev. Other Types of Partnership Partnership at Will A partnership at will is one in which no term of existence has been fixed and which may be terminated at the will of any partners. Justo Torres Jr., The Law On Business Organization, p. 18. 2008 Partnership with a Fixed Term A partnership with a fixed term is one whose period of existence has been fixed and agreed upon by the partners. Justo Torres Jr., The Law On Business Organization, p. 18. 2008 Joint Ventures Act as general partnership, but for only a limited period of time or for a single project. Partners in a joint venture can be recognized as an on going partnership if they continue the venture, but they must file as such. www.sba.gov/content/partnership# Kinds of Partners Jose Nolledo, Handbook on Partnership Law and Corporation Code, p. 24. 2002 Justo Torres Jr., The Law On Business Organization, p. 19. 2008 Black’s Law Dictionary 4th Ed. Rev. www.sba.gov/content/partnership# General Partner A general partner is a member of a general or limited partnership who is responsible to third persons with his separate property for his pro rata share of the partnership obligations after the partnership assets are exhausted. Limited Partner A limited partner is a member in a limited partnership who is not liable to third persons with his separate property for partnership obligations notwithstanding the exhaustion of the partnership assets. Capitalist Partner A capitalist partner is a general or limited partner who contributes money or property to the common fund of the partnership. Industrial Partner An industrial partner is actually a general partner whose contribution to the common fund of the partnership is his industry or services, becomes the common property of all the partners, as well as all the profits which they may acquire therewith. Managing Partner A managing partner is a general partner in a general or limited partnership who manages or administers the partnership business or property either by reason of agreement or pursuant to law. Winding Up Partner A winding up partner or liquidating partner is a member of a partnership entrusted with the winding up of partnership affairs upon the dissolution of the partnership. Ostensible Partner An ostensible partner is one whose name appears in the firm name, and who is known publicly as a partner Quasi Partner A quasi partners is a partner of lands, goods, or chattels who are not actual partners are sometimes so called. Secret Partner A secret partner is one who is a member of a partnership but is not known to the public as such. Dormant Partner A dormant partner is one who is merely passive in the firm, whether known or unknown, in contradistinction to those who are active and conduct the business of the firm as principals. Special Partner A special partner is a member of a limited partnership, who furnishes certain funds to the common stock, and whose liability extends no further than the fund furnished. A partner whose responsibility is restricted to the amount of his investment. Nominal Partner A nominal partner is a person who is not actually a partner but who, by his acts or omissions, is made liable, as a partner, to third persons for obligations of the partnership. Partnership Rights and Duties Do’s and Don’ts Famous Partnerships Rights of a Partner Property Rights of a Partner 1. His rights in specific partnership property 2. His interest in the partnership; and 3. His right to participate in the management. Incidents of Right in Specific Property Justo Torres Jr., The Law On Business Organization, p. 50. 2008 Equal Right to Possess Each partner has the right to possess specific partnership property for partnership purposes equally with the others. But by agreement a partner alone may possess and use a specific partnership property for partnership purposes. Partner’s Right Not Assignable A partner’s right in specific partnership property is not assignable without the consent of his co-partners. The reason of the law why a partner cannot assign his dissolution and liquidation is because it is impossible to measure the partner’s beneficial interest. Not Subject to Attachment or Execution This has reference to beneficial ownership of a partner in specific partnership property as distinguished from the interest of a partner in the partnership which may be levied upon by a judgment creditor. Not Subject to Legal Support The beneficial ownership of a partner in specific partnership property cannot be the subject of legal support since the latter obligation is personal to the partner. Rights and Duties of a Partner Rights 1. Right of the partner to take part in the day- to-day management of the firm. 2. Right to be consulted and heard while taking any decision regarding the business. 3. Right of access to books of accounts and call for the copy of the same. Rights 4. Right to share the profits equally or as agreed upon by the partners. 5. Right to get interest on capital contributed by the partners to the firm. 6. Right to avail interest on advances paid by the partners for business purpose. Rights 7. Right to be indemnified in respect of payment made or liabilities incurred or for protecting the firm from losses. 8. Right to the use of partnership property exclusively for partnership business only not himself. Rights 9. Right as agent of the firm and implied authority to bind the firm for any act done in carrying the business. 10.Right to prevent admission of new partners/expulsion of existing partners. Rights 11.Right to continue unless and otherwise he himself cease to become partner. 12.Right to retire with the consent of other partners and according to the terms-and conditions of deed. Rights 13.Right of outgoing partner/legal heirs of deceased partner. www.preservearticles.com/201101153418/rights-duties-and-liabilities- of-partners.html Duties 1. To carry on the business to the greatest common advantage 2. To be just and faithful to each other 3. To render true accounts 4. To provide full information Duties 5. To attend diligently to his duties 6. To work without remuneration 7. To indemnify for loss caused by fraud or willful neglect 8. To hold and use partnership property exclusively for the firm Duties 9. To account for personal profits 10. Not to carry on any competing business 11. To share losses 12. To act within authority 13. Duty to be liable jointly and severally 14. Duty not to assign his interest www.preservearticles.com/201101153418/rights-duties-and-liabilities- of-partners.html Partnership Rights and Duties Do’s and Don’ts Famous Partnerships How To Make Sure Business Will Prosper THINGS TO DO • Have a written partnership agreement. Set forth objectives of the partnership, expected benefits to the Department's programs, policy on endorsements and advertising and the responsibilities of each partner. THINGS TO DO • Authorize official time for employees to work on the joint effort for which the partnership was established. THINGS TO DO • Have employees who are officers in partner organizations recuse (disqualify) themselves from any involvement as a federal employee in particular matters in which that partner organization has a financial interest. THINGS TO DO • Create mutually beneficial partnerships with others whose missions may vary from ours, as long as they are not in conflict with our land and service ethics or civil rights policies. THINGS TO DO • Talk to representatives of organizations about sharing resources, including money, where we are likely to consummate an appropriate cost-sharing agreement. THINGS TO DO • Allow employees to assist a community partner in writing a grant proposal to a DOI bureau, as long as that employee is not part of the grant review or decision process. www.doi.gov/partnerships/ethics-dos-and-donts.cfm THINGS NOT TO DO • Endorse the products or services of the partner organization in your official capacity. • Solicit funds or donations for your programs from partner organizations without specific statutory authority to solicit and to accept donations and gifts. THINGS NOT TO DO • Create an organization to do what your own agency cannot do and then enter into a partnership with it. • Accept any compensation other than your federal salary for official duty services you provide to partner organizations unless that compensation is from a Federal agency. THINGS NOT TO DO • Use appropriated money to pay for lobbying activities to be performed by a partner. • Control or assume any measure of practical responsibility for the fund raising activities of private individuals or organizations that are partners. THINGS NOT TO DO • Partner on a project that is in conflict with our stated ethics or civil rights policies. • Partner on a project that might jeopardize the conservation of a threatened species on adjacent private lands. THINGS NOT TO DO • Partner on a project with an entity that discriminates based on race, color, national origin, sex, religion, age, disability, political beliefs, or marital or familial status. • Give preferential treatment to any private organization or individual. www.doi.gov/partnerships/ethics-dos-and-donts.cfm 4 Common Mistakes www.businessinsider.com/taking-on-a-business-partner-dont-make- these-4-common-mistakes-2010 4 Common Mistakes Not pinpointing roles Clearly lay out each person’s roles and responsibilities beforehand Don’ts Do’s 4 Common Mistakes Failing to discuss long- term goals Discuss your specific long-term goals openly Don’ts Do’s 4 Common Mistakes Not stipulating how to make decisions or resolve disputes Introduce a formal method for making decisions and addressing disagreements Don’ts Do’s 4 Common Mistakes Giving short shrift to your partnership agreement Create a clear agreement upfront Don’ts Do’s Partnership Rights and Duties Do’s and Don’ts Famous Partnerships Famous Partnerships Famous Partnerships Lucio and Susan Co Date Started 1998 Net Worth $1.9B Business Type Retail Famous Company Puregold www.forbes.com/profile/lucio-and-susan-co/ Top 10 Partnerships Famous Partnerships 1 Famous Partnerships Larry Page and Sergey Brin Company Google Year Founded 1998 Why Their Partnership Works Similar Interest www.businessinsider.com/10-super-successful-cofounders-and-why- their-partnerships-worked-2011-6?op=1 Famous Partnerships 2 Famous Partnerships Steve Jobs and Steve Wozniak Company Apple Inc. Year Founded 1976 Why Their Partnership Works Different Skills www.businessinsider.com/10-super-successful-cofounders-and-why- their-partnerships-worked-2011-6?op=1 Famous Partnerships 3 Famous Partnerships Evan William and Biz Stone Company Twitter Year Founded 2006 Why Their Partnership Works Similar Interest www.businessinsider.com/10-super-successful-cofounders-and-why- their-partnerships-worked-2011-6?op=1 Famous Partnerships 4 Famous Partnerships Bill Gates and Paul Allen Company Microsoft Year Founded 2006 Why Their Partnership Works Friendship www.businessinsider.com/10-super-successful-cofounders-and-why- their-partnerships-worked-2011-6?op=1 Famous Partnerships 5 Famous Partnerships Bill Hewlett and Dave Packard Company Hewlett-Packard Year Founded 1939 Why Their Partnership Works Friendship and Similar Interest www.businessinsider.com/10-super-successful-cofounders-and-why- their-partnerships-worked-2011-6?op=1 Famous Partnerships 6 Famous Partnerships Ben Cohen and Jerry Greenfield Company Ben & Jerry’s Year Founded 1978 Why Their Partnership Works Friendship and Similar Interest www.businessinsider.com/10-super-successful-cofounders-and-why- their-partnerships-worked-2011-6?op=1 Famous Partnerships 7 Famous Partnerships Pierre Omidyar and Jeffrey Skoll Company eBay Year Founded 1995 Why Their Partnership Works Loyalty to Customers www.businessinsider.com/10-super-successful-cofounders-and-why- their-partnerships-worked-2011-6?op=1 Famous Partnerships 8 Famous Partnerships Gordon Moore and Bob Noyce Company Intel Year Founded 2006 Why Their Partnership Works Different Skills www.businessinsider.com/10-super-successful-cofounders-and-why- their-partnerships-worked-2011-6?op=1 Famous Partnerships 9 Famous Partnerships William Procter and James Gamble Company Procter and Gamble Year Founded 1837 Why Their Partnership Works Family www.businessinsider.com/10-super-successful-cofounders-and-why- their-partnerships-worked-2011-6?op=1 Famous Partnerships 10 Famous Partnerships Evan William and Biz Stone Company Yahoo! Year Founded 1995 Why Their Partnership Works Similar Interest www.businessinsider.com/10-super-successful-cofounders-and-why- their-partnerships-worked-2011-6?op=1 Partnership Form Sample ARTICLES OF PARTNERSHIP KNOW ALL MEN BY THESE PRESENTS: That we, __________, __________, all of legal age, married and residents of __________, Philippines, Have this day voluntarily associated ourselves together for the purpose of forming a partnership, effective as of the date of this contract, under the terms and conditions hereinafter set fourth, and subject to the provisions of existing laws: AND WE HEREBY CERTIFY: I That the names, surnames and postal addresses of the partners of this partnership are as follows: NAMES ADDRESSES ________________ ________________ ________________ ________________ ________________ ________________ II That the name of this partnership shall be __________ and shall transact business under said firm name. III That the principal office of this partnership shall be at __________, Philippines, which office may be changed if necessary. IV That the capital of this partnership is _________ (P__________), Philippine Currency, which has been contributed in equal share by us, this is (P__________), Philippine Currency, by each one of us. V That the purpose or purposes for which this partnership is organized are: _____________________ _____________________________________________ ____________________________________________. VI That the term for which this partnership is to exist is _________ years from the date of this contract. VII That this partnership shall be under the management of __________, and as such manager he shall have charge and supervision of the affairs of the partnership; otherwise performing such acts as are necessary and expedient to promote the lawful purposes of the firm. VIII That the managing partner shall receive a monthly compensation of __________ (P__________), Philippine Currency. IX That the profits and losses of this partnership shall be divided and distributed proportionately on the ratio of the capital contribution of each partner. IN WITNESS WHEREOF, we have hereunto set our hands, this __________ day of __________, 20__, at the __________ Philippines. SIGNED IN THE PRESENCE OF: __________________ __________________ NOTARIAL ACKNOWLEDGMENT CERTIFICATE OF PARTNERSHIP KNOW ALL MEN BY THESE PRESENTS: That we, _____________, _____________, and _____________, all of legal age, married and residents of ____________________, Philippines, have this day voluntarily associated ourselves together for the purpose of forming a limited partnership, effective as of the date of this contract, under the terms and conditions hereinafter set forth, and subject to the provisions of existing laws. AND WE HEREBY CERTIFY: 1. That the name of this partnership shall be _______________, LTD. 2. That the purpose or purposes of this partnership are: ______________________________. 3. That the principal office of this partnership shall be located at ____________________, Philippines 4. That the names and addresses are as follows: NAMES DESIGNATION ADDRESSES (General or Limited) __________ __________ __________ __________ __________ __________ __________ __________ __________ 5. That the term for which this partnership is to exist is _________ years from the date of this contract. 6. That the capital of this partnership is _________ (P__________), Philippine Currency, contributed by the general and limited partners respectively as follows, to wit: NAMES DESIGNATION CONTRIBUTIONS (General or Limited) __________ __________ P__________ __________ __________ P__________ __________ __________ P__________ 7. That this partnership shall be under the management of __________ and as such manager he shall have charge and supervision of the affairs of the partnership; he shall have the power to use the partnership name in all acts and contracts relating to the partnership and in otherwise performing such acts as are necessary and expedient to promote the lawful purposes of the partnership. 8. That the Managing Partner shall receive a monthly compensation of __________ (_____), Philippine Currency. 9. That the profits and losses of this partnership shall be divided and distributed proportionately on the ratio of the capital contribution of each partner. IN WITNESS WHEREOF, we have hereunto set our hands, this _____ day of _____, 20__, at the ________, Philippines. _______________ _______________ General Partner General Partner _______________ Limited Partner SIGNED IN THE PRESENCE OF: _______________ _______________ NOTARIAL ACKNOWLEDGMENT How to Register a Partnership Business in the Philippines www.myoffice.com.ph/index.php/article/view/starting-a-partnership- or-corporation-in-the-philippines Securities and Exchange Commission 1. Verify and reserve the availability of the company name with the SEC. 1 Day - PHP 40 2. Deposit paid-up capital in the Authorized Agent Bank (AAB) and obtain bank certificate of deposit. 1 Day - no charge Securities and Exchange Commission 3. Notarize articles of incorporation and Treasurer's affidavit with notary public. 1 Day - PHP 500 4. Register company with the Securities and Exchange Commission. 3 Days - PHP 2,000+ Securities and Exchange Commission 5. Payment of documentary stamp taxes (DST). 1 Day - PHP 1 for every PHP 200 of capital Barangay 1. Obtain Barangay Clearance. 2 Days - PHP 800 Mayor’s Office 1. Obtain Community Tax Certificate (CTC) from the City Treasurer's Office (CTO) 1 Day - PHP 500 2. Obtain Mayor’s Permit to operate at the Licensing Section of the City or Municipality 1 Day - PHP 10,000+ Bureau of Internal Revenue 1. Register TIN with the BIR (Certificate of Registration) 2 Days - PHP 615 2. Obtain Certificate of Authority to Print (ATP) Form. 1 Day - no charge Bureau of Internal Revenue 3. Print receipts and invoices at the print shops accredited by the BIR. 1 Day - PHP 180/Booklet 4. Buy special books at any Bookstore or BIR's Office. 14 Days - PHP 150 (4 Pcs) Bureau of Internal Revenue 5. Have books of accounts and Printer’s Certificate of Delivery of Receipts and Invoices (PCD) stamped by the BIR. 1 Day - no charge Social Security System 1. Register with the Social Security System (SSS) 1 Week - no charge Philippine Health Insurance Corporation 1. Register with the PhilHealth Insurance Corp (PHIC) 1 Day - no charge END OF PRESENTATION Presented by KARL PANTIG SOURCES www.sba.gov/content/partnership# www.myoffice.com.ph www.preservearticles.com www.doi.gov/partnerships/ethics-dos-and-donts.cfm www.forbes.com www.businessinsider.com Justo Torres Jr., The Law On Business Organization, 2008 Jose Nolledo, Partnership Law and Corporation Code, 2002 Jordan Lewis, Partnerships for Profit, 1990 Black’s Law Dictionary 4th Ed. Rev.