Legal recourse for forming a business partnership
I am planning to start a business with my friends who happened to be brothers. Right now my would-be partner (the Elder brother) is working in India and my other would be partner (the younger brother) is working in Saudi Arabia.
How do we set up a partnership agreement, share wise? Should an NRI be a working partner or we have to treat him as an investor? If an investor, what percentage of profit will we have to share with him? Who can be a managing director? What should we include in partnership agreement? What other legal issues do I need to consider when starting a business?
You have not mentioned as to who is contributing funds for the business. Shares would depend upon the contribution made by each partner. In addition, please note that if your brothers are working in some organisation, then they cannot take an active interest in your business. The percentage of the shares of your partners in profit would again depend upon their financial contribution and whether they are taking active part in the business or not.
Get an agreement drafted by lawyer.
It would be better to form a private limited company or an LLP in which the liability of investors would be limited to the shares held. You would have to sit with some lawyer to share your concerns and legal issues to protect everyone's interest. Unfortunately, you question is very wide therefore, we would recommend you get in touch with a corporate lawyer.
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