A Sleeping Partnership Agreement is essential when establishing a business relationship where certain partners wish to invest capital without involvement in day-to-day operations. This document, governed by Indian law, particularly the Indian Partnership Act of 1932 and the Indian Contract Act of 1872, is commonly used when investors want to participate in business profits while limiting their involvement and liability. The agreement covers crucial aspects such as capital contribution, profit sharing, management rights, limitations on sleeping partner involvement, access to financial information, and exit provisions. It's particularly relevant for businesses seeking silent investors or when family members want to maintain ownership interest without active participation. The document provides legal protection for both active and sleeping partners while ensuring clear delineation of roles, responsibilities, and financial arrangements.
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1. Parties: Identification and details of all partners, including the active partners and the sleeping partner(s)
2. Background: Context of the partnership formation, business nature, and the intention to form a sleeping partnership
3. Definitions: Key terms used throughout the agreement including 'Sleeping Partner', 'Business', 'Capital Contribution', etc.
4. Partnership Structure: Details of the partnership type, business nature, and role demarcation between active and sleeping partners
5. Capital Contribution: Specifics of capital contribution by each partner, particularly the sleeping partner's investment
6. Profit and Loss Sharing: Ratio and terms of profit/loss distribution among partners
7. Rights and Limitations of Sleeping Partner: Clear outline of sleeping partner's rights and explicit limitations on involvement in management
8. Management and Control: Provisions regarding business management by active partners and decision-making processes
9. Duration and Term: Period of partnership and conditions for renewal
10. Accounts and Audit: Provisions for maintaining accounts and rights of sleeping partner to inspect books
11. Confidentiality: Obligations regarding business information confidentiality
12. Exit Provisions: Terms and processes for partner withdrawal or partnership dissolution
13. Governing Law and Jurisdiction: Applicable laws and jurisdiction for dispute resolution
1. Non-Compete: Restrictions on partners engaging in competing businesses, used when there's significant proprietary information or trade secrets
2. Death and Incapacity: Provisions dealing with death or incapacity of partners, particularly important for family businesses or long-term partnerships
3. Insurance: Requirements for business insurance, included when significant assets or risks are involved
4. Intellectual Property Rights: Provisions regarding ownership and use of IP, needed when the business involves significant IP assets
5. Additional Capital Contributions: Provisions for future capital needs and partner obligations, important for businesses anticipating growth
6. Dispute Resolution: Detailed arbitration or mediation procedures, recommended for complex partnerships or high-value investments
1. Schedule A - Capital Contributions: Detailed breakdown of initial capital contributions by each partner
2. Schedule B - Profit Sharing Ratio: Detailed mechanism for calculation and distribution of profits and losses
3. Schedule C - Business Plan: Overview of business objectives, strategy, and operational plan
4. Schedule D - Partner Details: Complete details of all partners including contact information and nominee details
5. Appendix 1 - Bank Account Details: Partnership bank account information and signing authorities
6. Appendix 2 - Assets Register: List of partnership assets and their ownership status
Authors
Relevant legal definitions
Clauses
Relevant Industries
Manufacturing
Retail
Technology
Real Estate
Professional Services
Healthcare
Food and Beverage
Construction
Hospitality
Trading
Education
Agriculture
Transportation and Logistics
Relevant Teams
Legal
Finance
Corporate Affairs
Compliance
Risk Management
Business Development
Investment
Corporate Governance
Partner Relations
Relevant Roles
Business Owner
Managing Partner
CEO
CFO
Legal Counsel
Company Secretary
Investment Manager
Business Development Manager
Finance Director
Partnership Manager
Compliance Officer
Risk Manager
Corporate Lawyer
Investment Advisor
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