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Is the partners' agreement essential when creating a company?

Business Law
Is the partners' agreement essential when creating a company?
Before setting up a company it is normal that the partners may have fears or concerns that arise especially when partnering with other people to create a company. The question then arises as to whether these partners will be the right people for the project you are considering.

It is at this point that the partners' agreement comes into play, and the questions that it entails: "What is a partners' agreement", "What content should a partners' agreement have", Should I regulate my remuneration in the partners' agreement? What should I do if, in compliance with the partners' agreement, the company is affected?" "Can a partners' agreement be modified?" "Does the partners' agreement avoid legal proceedings?"

The truth is that Forcam Lawyers we recommend that this situation be regulated as soon as possible to avoid possible conflicts between partners, and to be able to run the company from the beginning with total diligence and transparency.

What is the partners' agreement?

The shareholders' agreement is an agreement that affects those who have acquired shares in a company. Its objective is to go one step beyond the law in order to regulate the internal relations between the partners, the rights and duties of investors and entrepreneurs, as well as to mark the path to follow in case of possible conflicts or situations not foreseen in the regulations that may affect the parties.

Is the partners' agreement voluntary?

The preparation of this document, which is made up of a series of clauses, is entirely voluntary. Its content is not regulated by law, although the law does establish that its conditions must not be contrary to current regulations and is exclusively binding on those who sign it.

Is it advisable to have a partnership agreement in a startup?

The answer is yes, in the field of investment in startups, this instrument is very important given the conditions surrounding the activity and the risk faced by investors. Due to these particularities, some of its clauses do not appear in the articles of association or even disagree with them on certain points. This is why they cannot be registered in the Commercial Register, a fact that does not detract from their validity, although it does prevent them from being applied to third parties.

Partners' agreements usually include terms to encourage and ensure compliance.

Which formulas are most commonly used?

There are different formulas, among which we can find personal guarantees, the pledge of credits or penal clauses that establish a financial penalty in case of non-compliance. However, two of the most commonly used in the entrepreneurial ecosystem are the put option and the call option, which are used in the tag along and drag along clauses.

Does the shareholders' agreement allow the partners to exercise the right of exclusion and the right of separation?

The call option gives investors the right to opt out if a partner breaches a clause in the agreement: that is, they can force him to sell his shares in the company at a value subject to a penalty. This term can be enforced, for example, if the entrepreneur wants to leave the project before the term of the partners' agreement.

The sale option provides for the opposite case: it allows the partners to exercise the right of separation, so that they force the person who fails to comply with the agreement to buy shares at a price different from their actual cost.

As we have already seen, all these instruments are essential for establishing the basis and regulation of relations between the partners. For this reason, the Forcam Lawyers team exhaustively prepares the points included in each of these agreements according to the needs of the partners and the company.

What are the benefits of having a partnership agreement?

A partners' agreement establishes rules of operation and action to which all partners agree, and avoids possible conflict situations
in the future. The truth is that it is better to foresee and agree on things at the beginning than to ignore them and then to enter into discussions and litigation between the partners that may even lead to the closure of the company or the failure of the business.

Contact usand our company lawyers will study your specific case.

We offer quality legal advice to national and international companies, and we serve our clients in person at our offices, or from a distance online (videoconference, etc.). At Forcam Lawyers we have:

Commercial lawyers in Barcelona
Commercial lawyers in Madrid
Commercial lawyers in Reus