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Profit Sharing Ratio Partnership Agreement for United Arab Emirates

Profit Sharing Ratio Partnership Agreement Template for United Arab Emirates

A comprehensive legal agreement governed by UAE law that establishes and regulates a partnership arrangement between two or more parties, defining their respective profit-sharing ratios and business relationship. The document complies with UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and incorporates relevant Sharia principles, particularly concerning profit and loss sharing mechanisms. It details capital contributions, management responsibilities, profit distribution formulas, dispute resolution procedures, and partnership governance structures, while ensuring alignment with UAE commercial regulations and business practices.

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What is a Profit Sharing Ratio Partnership Agreement?

The Profit Sharing Ratio Partnership Agreement is essential for businesses operating in the UAE that wish to establish a formal partnership structure with clearly defined profit-sharing arrangements. This document is particularly relevant when two or more parties intend to collaborate in a business venture while maintaining compliance with UAE Federal Law No. 32 of 2021 and Sharia principles. It is commonly used in both mainland UAE and free zone establishments, addressing key aspects such as capital contributions, profit/loss sharing mechanisms, management rights, and partner obligations. The agreement's structure accommodates various business models while ensuring adherence to local regulatory requirements and business practices. It serves as a foundational document that helps prevent future disputes by clearly documenting the partners' understanding and agreed terms of their business relationship.

What sections should be included in a Profit Sharing Ratio Partnership Agreement?

1. Parties: Identification and details of all partners entering into the agreement

2. Background: Context of the partnership formation and brief description of the business purpose

3. Definitions: Definitions of key terms used throughout the agreement

4. Partnership Structure: Legal form of partnership and registration details under UAE law

5. Business Purpose: Detailed description of the partnership's business activities and objectives

6. Capital Contributions: Details of initial and any subsequent capital contributions by partners

7. Profit and Loss Sharing: Detailed mechanism for calculating and distributing profits and losses

8. Management and Control: Partnership management structure and decision-making processes

9. Partners' Rights and Obligations: Detailed rights and responsibilities of all partners

10. Banking and Financial Matters: Banking arrangements and financial management procedures

11. Books and Records: Requirements for maintaining partnership accounts and records

12. Term and Termination: Duration of partnership and conditions for termination

13. Dispute Resolution: Procedures for resolving disputes between partners

14. Governing Law: Confirmation of UAE law application and jurisdiction

15. General Provisions: Standard boilerplate clauses including notices, amendments, etc.

What sections are optional to include in a Profit Sharing Ratio Partnership Agreement?

1. Sharia Compliance: Specific provisions ensuring compliance with Islamic finance principles, used when partners require explicit Sharia compliance

2. Intellectual Property: Provisions regarding ownership and use of IP, included when the partnership involves significant IP assets

3. Non-Competition: Restrictions on partners' involvement in competing businesses, used when partners agree to such restrictions

4. Death or Incapacity: Procedures in case of death or incapacity of partners, important for family businesses or smaller partnerships

5. Additional Capital Contributions: Procedures for requesting and making additional capital contributions, used when future capital needs are anticipated

6. Exit Mechanisms: Detailed procedures for partner exit including buyout provisions, used in larger or more complex partnerships

7. Free Zone Specific Provisions: Additional provisions required for free zone operations, included when partnership operates in UAE free zones

What schedules should be included in a Profit Sharing Ratio Partnership Agreement?

1. Schedule 1 - Capital Contributions: Detailed breakdown of each partner's initial capital contributions including valuations of non-cash contributions

2. Schedule 2 - Profit Sharing Formula: Detailed calculations and examples of profit-sharing mechanisms

3. Schedule 3 - Business Plan: Initial business plan and projections

4. Schedule 4 - Management Structure: Detailed organizational structure and management procedures

5. Schedule 5 - Partner Information: Detailed information about each partner including contact details and representatives

6. Appendix A - Special Resolutions: List of matters requiring special resolution or unanimous partner approval

7. Appendix B - Banking Mandate: Banking arrangements and authorized signatories

8. Appendix C - Accounting Principles: Agreed accounting principles and practices to be followed

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions









































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Relevant Industries

Professional Services

Real Estate Development

Trading and Distribution

Manufacturing

Technology and Software

Construction

Hospitality and Tourism

Retail

Financial Services

Healthcare

Education

Consulting

Food and Beverage

Import/Export

Media and Entertainment

Relevant Teams

Legal

Finance

Corporate Governance

Business Development

Operations

Risk and Compliance

Strategic Planning

Investment

Corporate Affairs

Commercial Operations

Relevant Roles

Chief Executive Officer

Managing Director

Chief Financial Officer

Legal Counsel

Business Development Manager

Finance Director

Partnership Manager

Corporate Secretary

Investment Manager

Operations Director

Risk Manager

Compliance Officer

Board Member

General Counsel

Commercial Director

Strategic Planning Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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