5 benefits of the partnership agreement

In addition to preventing potential conflicts from harming the development of activities and the company's own image, formalizing a partners' agreement guarantees many other advantages.

Owning a company is no easy task. It is necessary to face the characteristic brazilian business environment, quite hostile to entrepreneurship and incredibly bureaucratic, in addition to the very high tax burden, several labor charges, constant concern with the filing of complaints before the Labor Court, charter renewals, fines, and much more.

As if all this were not enough, there is always the possibility of having to face conflicts arising from the relationship with the partners themselves. This is something unpredictable that can happen at any time, even if the company is performing very well and is consolidated in the market.

It is not uncommon for amicable relationships between partners to end up, at some point, in court due to conflicts. In fact, this is precisely the reason why 62% of startups do not prosper: one study pointed out that disagreements between shareholders are the cause why these venture models end up failing.

The truth is that disagreements are unfortunately inevitable in any corporate model, with very few exceptions. Therefore, it is fundamental to know how to prevent and also remedy the occurrence of eventual conflicts, as a way to preserve the value and image of the company regardless of any disagreement.

In this sense, a good option for those who wish to protect their company from eventual problems involving the relationship between partners and shareholders, is to formalize a partners' agreement.

It is a shareholders' agreement that provides for the purchase and sale of shares, the exercise of voting rights, rights and obligations of partners and shareholders, rules concerning company management, procedures for conflict resolution, and other business issues that may be deemed necessary.

The partners' agreement is foreseen in article 118 of Law 6404/76 (Brazilian Corporations Law). At this point, it is important to highlight that the execution of the agreement has some limitations.

In the case of a limited liability company, for example, the agreement can only be admitted if the articles of association expressly mention the possibility of using this mechanism. Otherwise, it cannot be used. Therefore, it is necessary to be aware of the provisions of the current legislation before entering into a partners' agreement.

In addition to preventing potential conflicts from harming the development of activities and the company's image, formalizing a partners' agreement guarantees many other advantages. Below, we list five benefits that deserve to be highlighted and that can be enjoyed by your company:

1. Strengthens corporate governance and provides legal security

Corporate governance policies, guided by the principles of transparency, fairness, and accountability, are responsible for ensuring a better relationship between the company's founders, partners, shareholders, and heirs.

In this sense, formalizing a partners' agreement contributes to s better governance in the company, since through it it is possible to stipulate and delimit which are the responsibilities and obligations of all those who act or are involved with the company in some way.

Furthermore, the agreement may establish rules regarding the assignment or transfer of quotas and shares, guaranteeing purchase preference to the remaining partners.

This way, it is possible to avoid the entry of unwanted partners by the remaining partners in the corporate chart and, consequently, minimize the chances of conflicts (especially judicial) after the effective exit of the withdrawing partners.

By having well-defined duties and responsibilities, establishing important membership rules, and mitigating friction, a safer working environment is maintained.

Thus, partners can focus on developing the company's activities and business, working with greater peace of mind, and avoiding having to devote time to resolving legal disputes.

2. It contributes to mitigating possible conflicts among partners.

The partners' agreement is an excellent instrument to mitigate possible grievances that may arise among the partners and shareholders of the company.

The document may establish which actions should be taken in certain situations (especially in cases where there is no agreement) and provide solutions in case something unexpected occurs (at which time it is difficult to reach a consensus on which decision to take).

In this way, the operation and development of the corporate activities will not be harmed, since emergency solutions will already be provided for in the agreement and will not demand time from the partners to discuss which measure should be taken.

In addition, it minimizes wear and tear that could arise during discussions among the partners in order to reach a consensus, since, depending on the context, the agreement will already have a resolution expressly provided for certain situations.

3. It regulates the transfer of quotas and facilitates the succession process

In the absence of a formal partnership agreement, withdrawing partners, shareholders, or quotaholders may transfer their shares to whomever they wish, regardless of the will of those remaining in the company.

In order to avoid the entrance of an unwanted third party, either because it is considered harmful in some way to the company or because it is not in the interest of the remaining members, for whatever reason, it is possible to stipulate in the agreement clauses ensuring preference for the acquisition of quotas and shares, or even tag along and drag along rules.

In addition, the agreement also allows the establishment of rules on how to proceed in the event of the death of one of the partners, shareholders or quotaholders. In this scenario, it is interesting to establish guidelines for the entrance and participation of heirs, also in order to preserve the composition of the social chart and protect the will and interests of other members.

4. Establish policies for the distribution of profits, dividends, and pro-labore

The moment of deciding on the distribution of values is, of course, of great interest to all members of the company. It is very common to have disagreements when it comes to defining how much should be effectively distributed and how much should be reinvested in the company.

A partners' agreement solves this problem. Through it, one can talk about policies for distribution of profits, dividends, and pro-labore, establishing from if the distribution should be made proportionally to the amount invested by the partners or if it should be based on the company's financial results, to the withdrawal or not of the pro-labore, and how the payments will be made (in cash or in installments).

5. Provides flexibility to meet partners' expectations

Because it is a very flexible instrument, a partnership agreement is also an excellent tool for meeting the specific needs of partners, shareholders, or quotaholders, as well as the company itself.

Thus, through a clear, objective, and well-defined agreement, it is possible to meet the interests of both minority and majority partners without major conflicts, and even protect the company's equity and assets.

The flexibility of the partnership agreement also allows it to be altered or adapted (provided it is by mutual agreement) to meet possible new demands from the partners. Likewise, it may be readjusted in cases where a new partner joins or after new investors are brought in.

In face of so many difficulties that are experienced daily by the Brazilian entrepreneur, the partners' agreement emerges as a tool to avoid and mitigate the occurrence of possible conflicts that may compromise the good functioning and performance of the company's activities.

Therefore, the agreement provides greater security and facilitates the work of all members of the company's board of directors, as it mitigates risks, safeguards the interests of partners, shareholders, and quotaholders, and also protects the company and its assets in a very effective manner.


Recent Posts

See All