Partnership Agreements- The treasurers' perspective (Contributions)
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Partnership Agreements- The treasurers' perspective (Contributions) Jerry,
I'm the treasurer of a new club and we
are in the process of writing our partnership agreement.
Specifically, as treasurer, what issues should I be most concerned
with?
Today, as we continue, let's look at the provisions in a
partnership agreement that pertain to member contributions and capital
accounts.
Many clubs set a minimum monthly capital contribution amount that is to be made by each
member of the club. Often this is set in the $25 to $50 dollar
range. Your club, however, may specify any appropriate
dollar amount or choose to not even require a minimum capital
contribution. It's entirely up to you and your fellow club members
to make this determination.
Also, some clubs place restrictions on the total size
of each member's capital account. My
club, for example, places a limit so that no partner's capital account shall
exceed more than 15% of the capital accounts of all the
partners. If, due to the withdrawal of a partner, one or more
of the remaining partner's capital accounts exceeds 15% of the capital accounts
of all the partners, those partners are limited to making the minimum monthly
capital contribution until such time as their capital
accounts are once again reduced below 15% of capital accounts of all the
partners. Other clubs place no limit on the relative size of a
each member's account. As you will later see, the
relative size and related restrictions placed on the capital account of each
partner will play an important roll in determining how your club wants to
handle its
management. Check out Ask_Candis
for a recently posted message on this very topic.
Also, standard in most club partnership agreements is a
paragraph that defines the capital account of each member. Typically, this paragraph will
specify that an account will be maintained in the name of each partner, that any
change in the value of the partnership will be applied respectively to each
partner's account, and that any contribution or withdrawal made by a
partner will be applied respectively to that partner's
account. As in the Partnership
Agreement of the Mutual Investment Club of Detroit , your club should
include a paragraph that directs that all profits and
losses of your club are to be shared by each member
of the club in proportion to the value of each member's capital
account.
Next, we'll discuss the management
of your club and how you should conduct club
voting.
Until then, and as always, feel free to send you
questions, comments, and suggestions to Trez_Talk.
Jerry
St.Louis, Missouri
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