Partnerships are one of the more common modes of business operation in Malaysia. Partnerships are formed to operate concerns varying from professional firms (such as legal firm, accounting firms and medical practices) to trading firms.
A partnership agreement is a legally binding contract entered between partners. Although it is not mandatory to have a partnership agreement in Malaysia, it is highly advised to have a piece of partnership agreement between partners for the following reasons/benefits:-
- To spells out a clear understanding of the agreed terms and arrangement between partners;
- To ensure the smooth operation of the business;
- To set out the agreed statement of roles and responsibilities of each partner so they are well aware of the scope and extend of their part in the business;
- To explain how partners will share profits and losses, how much money each partner will put in, and what will occur if a partner decides to leave the business;
- To provide guidance on the management and decision-making processes and further to stipulate who has the authority to make decisions and the process for making major business decisions;
- To provide for a dispute resolution procedure for the partners to recourse in the event of any possible conflict;
- To avoid disputes and misunderstanding as much as possible among the partners;
- To safeguard the interest of the business and deal with the circumstances when there are changes in the partnership such as in the case of death/bankruptcy/retirement/expulsion of a partner, or in the event of a dissolution of the partnership;
The legal fees for preparing and drafting such partnership agreement are depending on the complexities and you may request our Free Legal Quotation by clicking the WhatsApp button at the bottom of our website.
