Partnership Agreement
Discuss about the Business Partnership for Business Plan and Regulatory Controls.
The business of online nature in the domain of Internet Business Reselling products over the vast resource pool of a huge number of potential customers were planned and chalked out (Alhabeeb, 2014). . It was agreed among the partners that Bob, Me and Zac will form an agreement of Partnership for the concerned business. It was also agreed that Bob will allow for an initial investment of $2,00,000.00 for the initiation of the concerned business. It was also mentioned in the business that the Me and Zac will be allowed for a remuneration of about $10,000 per month but not as employees but as consultants for the concerned business.
The development of the Business Plan ;
The development of the business plan will involve the development as well as the attainment of the strategic business level in different types of units :
Choice of a Business :Internet Business Reselling products.
Area or Location or Occurance : NZ.
Nature of Business : Partnership.
Legal Bindings : Formation of a Limited Partnership agreement according to the Limited partnership act, 1908.
Modes of Operation : To be decided by the Partners and then to be incorporated in the legally binding Agreement for the development of a job responsibility of the partners and the remuneration or the share of profits that may be included or derived from the concerned business.
Different Steps of the Business Plan :
The different steps of the business plan involves the inclusion of the different types of discussion regarding the domain of business and its area of operation in the concerned business.
- The development of a modus operandi for the concerned business.
- The choice of the target market and the target consumers.
- Identification of the potential market.
- Identification of the target segment for the concerned business.
- The job role description and division regarding to the suitability of the partners.
- The development of a legally binding job responsibility of the partners.
- The development of a proper type of remunerative system as per the laws of the land for the concerned business.
- The development of a cost budget for the concerned project.
- Development of different cost centers for the concerned business
- The development of different types of pricing and budgeting components for the concerned business
- The development of an effective monitoring system for the income and expenditure system of the concerned business.
- The development of a ER diagram and a cost sheet to monitor the flow of income and expenditure of the concerned business in the concerned domain.
- Development of funds: There should be a written effect of the contribution of the different types of the partners regarding the development and the contribution of the funding for the commencement as well as the smooth running of the concerned business (Allen & Kraakman. 2016).
Fig. : Funding.
- The development and a successful implementation of an effective control measure and a feedback mechanism for the entire business process for the concerned business (Beatty et al., 2018). The development of a weekly based MIS report for the concerned activities in business will also serve as a good control measure.
- The development of a flawless MIS report generation.
- The development of interlinked Information system in relation to the different segments involved in the concerned business.
- The development of the different types of the activities that may lead to the development of a speeded business network, i.e, the development of a perfect marketing strategy for the concerned business for the better return of investment and accumulated profits (Bernstein, 2015).
- The other types of the development of the business plan strategies will involve :
- Development of Recruitment and staffing facilities for the concerned business.
- The development and the implementation of the advertisement facilities for the concerned business.
- The development of internal audit control features for the better control and understandibility of the concerned business.
- The development of a sustainable pricing facility for the concerned business facility.
AIM: To understand the liability that arises outside or, an irrespective of, the structure uses.
The regulatory controls that applies to the concerned business may include the following :
- The first type of the regulatory control will involve the clear indication of an agreement for the partnership between the three people that are involved in this concerned business namely, Me, Bob and Zac. The share of profit and the job responsibilities should be shared with a clear listing for the concerned business in the agreement for the Partnership.
- The other regulatory control will involve the different types of the compliance remedial measures that may be involved for the smooth running of the concerned business in accordance with the legal enforcement of the concerned business (Blake, 2016).
- The rules for the entry and exit of the partners should be clearly mentioned in the agreement for the partnership and in a legally binding format (Law, 2016).
The agreement for the Partnership that will be formed should have a legal binding format with a continuity of the general agreement as well as the different types of facts of the nature and duty of the Partners, their role and their active involvement in the concerned business (Burns, 2016). The partnership Agreement will be made between the three partners, Me, Bob and Zac in a legally binding manner. It was agreed among the partners that Bob, Me and Zac will form an agreement of Partnership for the concerned business. It was also agreed that Bob will allow for an initial investment of $2,00,000.00 for the initiation of the concerned business. Zac will provide for the instruments and the office space provided for the concerned business. It was also mentioned in the business that the Me and Zac will be allowed for a remuneration of about $10,000 per month but not as employees but as consultants for the concerned business.
Business Plan Development
Worksheet is being attached.
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Objectives · Develop sustainable Business · To provide quality service to the customers. · To keep strict adherence with the legal use of Internet Business reselling productsaccording to the laws of NZ. |
– The aims of the business is to develop more and more business network and to satisfy all my clients with quality work. |
Outline the law that applies and any issues – The implications for the Internet Business reselling productsdeals with a perfect type of work agreement and to move in accordance to the laws of the land governing such an attribute. |
Outline any personal issues that arise – The most important aspect of such a business to maintain and safeguard the different types of agreements and promises that are made in the agreement for partnership between the partners of the concerned business. |
How will you deal with this issue: – Suitable changes should be maintained to default rules. – If there are instances of some rules that cannot be changed then some modifications of the same has to be made. |
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RISK – The main type of the risk involves the risk of debts. – The other types of risks involves the risk related to partners. – |
Will you accept risk? There should be a risk management plan and a definite amount of plug in for the concerned risk. Personal risk? This involves the amount of risk a person takes in for the concerned business. |
The main type of the implication for the concerned type of the business should be explained. |
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To abide by the Internet Business reselling productsrules in NZ and also in accordance to the legal business partnership agreement. |
One of the most important aspects of Internet Business reselling productsis Risk mitigation procedures and policies to be undertaken. |
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The contract with the business partners should be the same with Credit mitigation facilities. It should clearly be stated how the credit mitigation will be ensured. |
Personal risk : I will accept some risk from this for the agreed expenses for the cameras, lease, and premises plus expenses How much personal Risk can I sustain ; – The gear – a portion of it. – The amount of investment made and in case of defaulters who will be liable to pay for it. – The bank, also a portion of it. To limit the risk of further liability I will use limits in the partnership agreement. |
Explanation of the said business : Here it can be said that the usual kind of business is commercial Internet Business Reselling products and the purchase of equipment or contracting that relates to this kind of business. Personal Risk ; I will be jointly liable unless the third party knows of any limits. We have a limit but we cannot tell all the suppliers this. That’s not commercially realistic. The limit silver lining cannot be made public. Purchases in the usual way of business? – Enter loss making contracts – Employ people? How would this affect my business? It would make a lot of expenses we need to pay and we are very much depending on house sales and listings of the expensive ones, the council keeping up the contracts, and walk in. Not the most secure business. Here I could face a lot of competition or the government might ban on some commodities that may be considered as essential for my business use like this. Regular maintenance of an income and expenditure statement to mitigate risks. |
Personal risk. The joint liability mitigating procedure should be utilized for a fruitful and a better way of business maintainance. What could this result in for me? – The cost of an extra machinery. – The financial feasibility of my partners in the said business. – The amount of personal money to be at risk if the partners do not contribute. |
This rules cannot be changed. It is compulsory so there is no way to avoid it. I can limit with the rule, but this is of no effect on third parties without knowledge. I can sue my partners for breach but that’s only useful if they can pay me. |
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s.13 – liability for actions in the ordinary course of business causing loss to others. S.15 partners are also responsible for other activity of the other co partners. |
The risks relating to this business. eg Dropping the gear on someone – large potential liability for operator and partners under health and safety. Fines and compensation. Should be imposed. Recommendation : Damage to property Will I accept – NO so I can take insurance but this may not work if we do something that the insurance prohibits like doing illegal business. |
We have a lot of potential risk here flying over people, over roads, and the vehicles. I can make up an example here of the damage that might occur. How does this affect the business – It is an expense of the business and take the cash flow or even mean the business cannot survive – Use your example here |
Explain what s.15 does, the kind of liability that may be associated with this kind of business. |
I cannot avoid this. Can I limit with rules, yes, eg with procedures on use and ensuring training and licensed use of the Internet Business Reselling products, etc. |
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Others – Find examples for other sections |
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s.23 – loss of contribution s.19 on leaving, also s.39 death of partners,s.27 |
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Commercial Objectives |
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– The aims of the business is to develop more and more business network and to satisfy all my clients with quality work. |
Outline the law that applies and any issues – The Partnership laws in NZ |
Outline any personal issues that arise I will be jointly liable unless the third party knows of any limits. We have a limit but we cannot tell all the suppliers this. That’s not commercially realistic. The limit silver lining cannot be made public. – |
How will you deal with this issue: To make all the activities and its probable clauses in the agreement of Partnership. |
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– Return on investment the nature, time and the amount. – Loan : If required how to persue it and who will be liable for the payment in case of defaulters. |
What’s my aim? The Aim : – To Get profit – To Sell the business once its built – Should I loan or contribute – Is there a percentage return I want Payment for hourly work done. |
This is identifying the rules in s.27 The aims ; To sell the business after 3 years , then I don’t want to take profit and I will reinvest so there will be growth capital Minimising profit for sustainable business growth. To develop ways to find out a guaranteed return on the loans. |
Synopsis ; This affects principals (partners) by either making money available for personal use or for growth. They may need to lend or contribute more. Money will be used for salary/hourly rate which may exhaust the income. |
To develop the business so that it can be run sustainably without the extra edge of the credit level. |
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– Profit – To determine the amount of profit in the concerned domain of business. |
This relates to inputs and the expected returns. |
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– Control o To develop effective control measures o Ethical business control measures |
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– Growth o does the structure allow for growth o To develop progressive growth regulated structures. |
Capital regeneration from Partners. What do new partners bring in and get in terms of a share of profit, management rights, etc. |
You have default rules here. |
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o What should be done by a Partner before he wants to exit. o Exit Procedures § how to end the business § how to exit but not end the business return of capital on exit–How can we get return on Capital. |
Implications – what happens when someone leaves for the business. When a partner leaves then a new Partner may be introduced to take his place and the accounts have to be reconciled with the previous Partner before he exists. |
Personal issues; · Depends on what you choose for your exist rule. · Can I leave when I want? · Can I therefore get a share of the assets at any time or do I have to wait. |
Rules for exit : · There is no fixed time for the Partnership to be carried or to be adhered to, if a partner wishes to leave he or she may do so by serving a notice.. · In case of a legally binding Partnership deed the issues of a notice in writing and subsequently signed by the concerned partner may serve the purpose. |
Step 3
Company Structure :
The Company Structure will be organised in the following manner :
The Company structure will follow a format in which the Manager of the specific business unit and the industry will be confined to the sole responsibility of coordination of the different types of the activities and the execution of the different types of the functions of the concerned industry (Coffee et al., 2015).
Galbraith (2014) stated that the Supervisors will be responsible to the manager for the execution of the deliverables and the manager will intern be responsible to the management (The Common consent of the partners in this partnership type of Business).
Worksheet is added with answers to the concerned questions.
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Objectives · Develop sustainable Business · To provide quality service to the customers. · To keep strict adherence with the legal use of Internet Business reselling products and its applicability according to the laws of NZ. |
– The aims of the business is to develop more and more business network and to satisfy all my clients with quality work. |
Outline the law that applies and any issues The implications for the Internet Business Reselling products deals with a perfect type of work agreement and to move in accordance to the laws of the land governing such an attribute. Issues and implications will depend on the business – Leaving in 5 years is a continuity issue. – Share sales brings in new people and options as well as capital. – Does my business need capital to grow? This is an important question and the answer is Yes. – |
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Commercial Objectives |
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– Return on investment – The answer to this question is basically an integrated approach that will deal with the different types of the reality measures that may be made applicable for it. |
This should be the same as partnership – you can then easily compare the two structures to decide which achieves your aims. What’s my aim? – Grow the business and sell in 5 years. – Get profit in my pocket. – I do not want to put money in, I want to use other peoples money (banks and credit) Getting paid. This is not the same issue here. My options – Directors fees – Salary – Consulting to the company |
Once you have your objectives then line up the sections beside them. I Dividend policy but subject to solvency test. s. 52 & 56 Using other peoples money. This will be an issue in directors liability. The Duty of the Directors will be to ensure that the Directors are loyal to the concerned company and that the share holders are provided with the accurate type of information in regards to the concerned business. |
I want 3 classes of shares. s.39 cannot stop transfer but may allow transfer after 3years at market value. |
Set out which of these need a change to the constitution, how you do that and refer to the sections on constitution changes. Inclusion of the share holders agreement in the concerned business agreement. Write clause. I want independent valuation of shares at 5 years, pre-emptive rights for all of us. NO transfer prior. This is a liability issue. Simple clause An interests register. For record keeping purposes, is a must for the company as well as a register for the logistics should also be maintained by the concerned Company. |
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– Profit |
My options are based on my shares or by agreement with the other shareholders – preferential rights. – the dividend policy . |
s.36 share classes and rights. I want preferential shares. |
Realistic Approach : If I have put nothing more in than the others. On my facts I must be the ‘partner’ putting in contracts. If this is higher value, as I am giving up income, then I can negotiate my position |
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– Control : – To develop effective control by the use of technology audit – To provide for internal audit features. – To provide for human resource monitoring. . |
I want control as – a director – management |
Lot of overlap here Sections on – share rights – classes – issue of new shares – transfer of shares |
Explain the sections What are my options. – Using classes for control rights – Preventing new shares? – Preventing transfer of shares? – A shareholders agreement? There are different forms of problems that may creep into such a business so in order to maintain them we should have a definite type of regulatory measure that may be applied for the rectification and modification of the errors as and when it occurs in the concerned Company. |
Same as above |
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Growth of the Concerned Business : |
I want to grow the business This means capital, new deals, So far I have totally restricted new shareholders, transfers and want to take money as we go. This structure is very restrictive on growh. My control’needs’ are a problem too. |
– Capital – Borrowing ( I might have a limit on borrowing in the constitution as a risk prevention.) |
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My company, Drenzil Ltd, is an entity that can last continuously. My exit aim is 5 years HOW – redeemable shares. S.68 – sale as 5 years as above. – Liquidation of the company (compulsory in constitution to achieve my aim) – Return of capital – do we have preferential rights for all classes or just some to get paid first on liquidation? – Do we need to pay out shareholders? What can they do if we don’t pay them out when they want to leave and they don’t have any specific rights? The effect on the business of each is clear. Ending versus continuing and changes in shareholders and directors. Consider these for your business. |
Explain options individually One example Redeemable by the shareholder – Only pay if can pay or apply for exemption. – Will take money – Change of shareholder and loss of expertise and contacts – Shareholders is a creditor. |
Sections – There is a time and value – S.114 on for exemptions. |
There may be certain times when we would require a modification of the existing provisions of the agreements and that should be done following a legally formatted procedure. |
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RISK |
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RISK – The risk to you personally from the business for debts – The risk related to actions of your other directors – See list above and the issues related to personal liability of directors and shareholders. – Consider the risk as a director and a shareholder. |
Try to quantify the risks. This is largely a guess but should have some reason for the amount give. Estimate what this means in value given the size of your business. Category of the evaluated risks : – Risk to the business – Risk to you as a shareholder – Risk to you as a director. |
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List the risks (risks include areas such as failure to pay creditors, insolvency, contracts entered into, breach of duties. |
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Failing to pay. – Refer to your facts on the amounts. – Contracts formed by directors s. 180 – binding (notice of constitution limits? – s.18-20 – like partnership issue) – Negligence – by company and by directors. – |
– There are different types of agreements and Capital investment sharing decisions between the partners of the concerned Company. – Bob is ready to make an investment for about $2,00,000.00 for the initiation of the concerned business. – Zac is ready to provide for the instruments cost and the office space that may be required for the expansion of the concerned business. – The Partners of the concerned business is ready and has invested the said amount in the concerned business and also the same has been mentioned in the Partnership deed. |
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MEETINGS |
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Heading |
Purposr ; The purpose of the meetings should be clearly stated. |
Value of the Meetings to the company or the Share Holders : It will help to keep the shareholders updated in case of the different types of activities taking place in the concerned organization. |
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Share holders meetings Annual meetings Special meetings |
The importance and the necessity of the different types of meetings and its time of occurrence should be mentioned in the legally documented Partnership agreement. |
Electronic meetings : Sometimes they are. |
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Ans. : The Clear statement of the preferred structure of the business will include the different types of aspects of revenue sharing among the partners (Hillary, 2017). The different types of the job responsibilities that will be assigned to the partners and the different types of the remuneration that may be set for the various types of activities that will be done in the following case (Kaufmann, 2017). It should be noted that the different items of revenue sharing and also of the different types of the aspects of the remuneration should be made in respect to the partnership agreement according to the laws governing in the concerned land (Kubasek et al., 2015).
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Topic |
Partnership Form of Business |
Company form of Business |
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Ownership |
It cant be transferred. |
Can be transferred to spouce or others as may be decided by the Share holders |
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Tax Benefit |
It enjoys less tax benefits. |
It enjoys more tax benefits. |
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Business Responsibility |
It is borne by the Partners involved in the Business as per the Partnership Deed of Agreement. |
It is borne by the duties and the responsibilities of the Share Holders (Mann & Roberts, 2015). |
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Nature of Liability |
Unlimited Liability |
Limited Liability |
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Formation |
Easy to form |
Requires certain business rules and regulations to be formed (Sornarajah, 2017). |
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Personal liability protection |
Is not applicable. |
Is applicable. |
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Cost of Business |
In case of Partnership type of Business the cost of running such a business is relatively low. |
In case of a Company it is relatively high. |
Step 5: Research question
Ans. ; The statistical references do indicate the fact that the SME has a great or substantial impact in the NZ economy. It has been observed that the SME are the backbone of the country’s economy (McQueen, 2016). It also reveals the fact that the 97% of the industries in NZ Economy are small business enterprises involving less than 20 employees and it also indicates the fact that about 28% of the country’s GDP is obtained from such industries (Miller, 2015).
The sector of the economy that the business is a part of is the Internet Business reselling products. This is a prospective segment in terms of business growth and profit. Though there are a few large names and firms that are present in the existing business still the amount of prospect in the concerned business is relatively high (Scarborough, 2016).
The major causes of failure in this type of business is competitive pricing and the lack of having a spread out network for the concerned business. The other causes involve the use of innovative technology and machinery for such an event. In case of the lack of such an event the business can be seriously affected (Schell, 2017). The availability of a spread out network and the different types of the pricing that should be made should be competitive in this regard.
Regulatory Controls
The business moves on with debit and credit. The principles of Debtors and Creditors do form a successful business (Twomey et al., 2016). But if the business goes down then there occurs a serious liability of concern for the Creditors which the business has to then cope up with. Here we can see the strength of solvency of the concerned business in respect to the different types of the Creditors associated with the concerned business (Light, 2015).
The role and the liability of the Directors are very important in order to have a sufficient determinant to the growth and progress of the concerned company (Welch et al., 2016). It has been observed that the Directors are just the person who are considered to be the back bone of the concerned industry. As depending on their decision and verdict a company is seen to run smoothly and flawlessly (Sowell, 2015). It has also been observed that they are also responsible for act of the Duty of the Care and Diligence of the concerned company. There are also certain rules and principles that do prohibit the Directors from providing misleading facts and figures regarding the concerned Company to the said shareholders involved in the concerned business (Twomey et al., 2016).
References;
Alhabeeb, M. J. (2014). Entrepreneurial finance: fundamentals of financial planning and management for small business. John Wiley & Sons.
Allen, W. T., & Kraakman, R. (2016). Commentaries and cases on the law of business organization. Wolters Kluwer law & business.
Beatty, J. F., Samuelson, S. S., & Abril, P. S. (2018). Business law and the legal environment. Cengage Learning. Levi-Faur, D. (2017). Regulatory capitalism. Regulatory Theory, 289.
Bernstein, M. H. (2015). Regulating business by independent commission. Princeton University Press.
Blake, A. (2016). Dynamic directors: Aligning board structure for business success. Springer.
Burns, P. (2016). Entrepreneurship and small business. Palgrave Macmillan Limited.
Coffee Jr, J. C., Sale, H., & Henderson, M. T. (2015). Securities regulation: Cases and materials.
Galbraith, J. R. (2014). Designing organizations: Strategy, structure, and process at the business unit and enterprise levels. John Wiley & Sons.
Hillary, R. (Ed.). (2017). Small and medium-sized enterprises and the environment: business imperatives. Routledge.
Kaufmann, W. (2017). Going by the book: The problem of regulatory unreasonableness. Routledge.
Kubasek, N., Browne, M. N., Dhooge, L. J., Herron, D. J., Williamson, C., & Barkacs, L. L. (2015). Dynamic business law. McGraw-Hill Education.
Law, J. (Ed.). (2016). A dictionary of business and management. Oxford University Press.
Light, R. S. (Ed.). (2015). Structuring venture capital, private equity and entrepreneurial transactions. Wolters Kluwer Law & Business.
Mann, R. A., & Roberts, B. S. (2015). Business law and the regulation of business. Nelson Education..
Miller, R. L. (2015). Business Law Today, Standard: Text & Summarized Cases. Nelson Education.
Scarborough, N. M. (2016). Essentials of entrepreneurship and small business management. Pearson.
Sornarajah, M. (2017). The international law on foreign investment. Cambridge university press.
Sowell, T. (2015). Say’s Law: An historical analysis. Princeton University Press. Schell, J. M. (2017). Private equity funds: Business structure and operations. Law Journal Press.
Twomey, D. P., Jennings, M. M., & Greene, S. M. (2016). Anderson’s Business Law and the Legal Environment, Comprehensive Volume. Nelson Education.
Welch, E. P., Saunders, R. S., Land, A. L., Turezyn, A. J., & Voss, J. C. (2016). Folk on the Delaware General Corporation Law: Fundamentals. Wolters Kluwer Law & Business.
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