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The Cleardocs Partnership Agreement is relevant for most business partnerships.

A Partnership Agreement sets out the rules under which a Partnership must act. Unless there is an agreement in place all Partners are equal, and must share the business' profits, and cover losses, equally. Having a partnership agreement in place allows the Partners to record, among other things:

• How the business' profits will be shared
• How much money each Partner brings to the Partnership business
• How new Partners can join the Partnership
• How Partners can be removed from the Partnership, and
• The different roles and responsibilities of each Partner

What documents are included in the partnership agreement package?

The Cleardocs Partnership Agreement document package includes:

• Partnership Agreement
• Minutes of Meeting at which the Partners of the Partnership resolve to form the Partnership, and appoint bank signatories
• Minutes of Meeting of a Trust's trustee (sole or joint) resolving to join the Partnership — and if the trustees are joint trustees, appointing a nominee to act on their behalf
• Minutes of Meeting of the directors of a Company resolving to join the Partnership and appointing a nominee to act on the company's behalf

The Cleardocs Partnership Agreement also includes pro-forma documents to use in the future:

• a "Deed of Accession" — to be used if a new partner joins the Partnership. The deed must be signed by all partners and the new partner; and
• a "Unanimous Resolution" — to be used for a decision about the Partnership which must be made by unanimous resolution of all Partners.

What is the role of a partner's nominee in the Cleardocs Partnership Agreement?

The Nominee plays an important role in the administration of the Partnership for business partnerships that have a Cleardocs Partnership Agreement in place. In particular:

• the Nominee can make decisions on behalf of the Partner; and
• if the Nominee suffers an Insolvency Event (as that term is described in the Partnership Agreement), then that Partner's shares can be bought by the other Partners; and
• if the Nominee dies or becomes permanently disabled or incapacitated, then that Partner's interest can be bought by the remaining Partners.

Who can be a partner under the Cleardocs Partnership Agreement?

The Cleardocs Partnership Agreement document package allows for partners in the business to be:

• an individual — including if they act as a trustee of a trust;
• 2 or 3 individuals acting as joint trustees of a trust. If you have more than 3 individuals acting as trustee, then Maddocks suggests that you consider using a company to play that role;
• a company — including if it acts as a trustee of a trust.

The Cleardocs Partnership Agreement document package does not allow a partner that is a combination of:

• an individual trustee and a corporate trustee — Maddocks suggests you consider forming a company to play that role; or
• two or more corporate trustees — again, Maddocks suggests you consider using a single company instead.

Why a company? If you would like any other combination of individuals or companies (or both) to be a partner, then Maddocks suggests you consider using a company as the partner. That way you can have the company controlled (through directorships and shareholdings) by the people you wish to make up the partner. This works more efficiently because the rules about how the company is to make decisions are set out in the company's constitution and in the corporations law.

Need a company? You can set up the company through Cleardocs — and register the company with ASIC electronically. The whole process takes only 20 minutes or so — and you get the ACN instantly. A company through Cleardocs costs $563.50 (including ASIC fees of $426 and GST).

How many partners can there be under the Cleardocs Partnership Agreement?

The Cleardocs Partnership Agreement is suitable only if there are up to 20 partners. This is consistent with section 115 of the Corporations Act 2001 (Cth) (Act). However, there are some exceptions to that restriction contained in the Corporations Regulations.

If you need advice about a Partnership Agreement for more than 20 partners, then please ring us on 1300 307 343. We will arrange for you to speak to our lawyers at Maddocks. They will speak with you for free for 5 minutes or so about what you need to do.

Can partners contribute something other than cash under the Cleardocs Partnership Agreement?

The Cleardocs Partnership Agreement allows Partners in the business to contribute only cash as the initial capital of the Partnership — that is, no other types of assets are allowed as initial capital (such as intellectual property or other assets).

However, Partners could contribute nominal cash towards the initial capital in accordance with their Proportions and then by Unanimous Resolution record any additional capital contributions of non-cash assets. To enable this, the Cleardocs Partnership Agreement includes a pro-forma Unanimous Resolution as Schedule 3 to the Deed.

Frequently Asked Legal Questions for Partnership Agreements

• Why would I choose a partnership structure over another structure?
• Partnership capital: Can partners contribute something other than cash?
• Partnership capital: Does the amount of initial capital have to match the Partner's initial proportions?
• Can partners be paid a salary?
• How do Partners make decisions about the Partnership?
• What is the role of a partner's nominee?
• How do Partners sign documents?
• How is the Partnership taxed? What taxes is the Partnership liable for?
• How are tax losses of the partnership treated?
• What happens when the Partnership is reconstituted or terminated?