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Basic Operating Agreement Template for Singapore

A Basic Operating Agreement under Singapore law is a fuNDAmental document that establishes the structure, management, and operational framework of a business entity. It outlines the rights, responsibilities, and relationships between members, capital contribution requirements, profit-sharing arrangements, and decision-making processes. Governed by Singapore's Companies Act and related legislation, this agreement serves as the primary internal governance document that provides clarity and legal certainty for business operations.

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What is a Basic Operating Agreement?

The Basic Operating Agreement is essential for any business entity operating in Singapore that requires a formal structure for its operations. This document is particularly crucial during business formation and becomes the reference point for managing internal relationships and operations. It includes vital provisions for capital contributions, profit distribution, management rights, and dispute resolution, all aligned with Singapore's legal framework. The agreement should be crafted to comply with the Companies Act and other relevant Singapore legislation while addressing the specific needs of the business structure.

What sections should be included in a Basic Operating Agreement?

1. Parties: Identification and details of all parties to the agreement

2. Background: Context and purpose of the operating agreement

3. Definitions: Key terms used tHRoughout the agreement

4. Business Purpose: Scope and objectives of the business

5. Capital Contributions: Initial and ongoing capital requirements

6. Management Structure: Governance and decision-making framework

7. Profit and Loss Distribution: How financial benefits and losses are shared

8. Transfer of Interests: Rules for transferring ownership stakes

9. Dissolution: Process for winding up the business

What sections are optional to include in a Basic Operating Agreement?

1. Non-Compete Provisions: Restrictions on competitive activities - use when protecting business interests from member competition

2. Intellectual Property Rights: Ownership and use of IP - include when IP is significant to the business

3. International Operations: Rules for cross-border activities - include when business operates internationally

4. Special Purpose Vehicles: Provisions for subsidiary entities - include when complex corporate structures are involved

What schedules should be included in a Basic Operating Agreement?

1. Schedule 1: Capital Contributions: Detailed breakdown of initial capital contributions

2. Schedule 2: Member Information: Detailed information about each member

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

4. Appendix A: Voting Rights: Detailed voting procedures and rights

5. Appendix B: Management Procedures: Detailed operational procedures

Authors

Alex Denne

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

Jurisdiction

Singapore

Publisher

Ƶ

Document Type

Operating Agreement

Cost

Free to use

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