Here is a sample partnership agreement for a typical investment club which uses bivio for their accounting. Next to each topic is a link to a page which discusses considerations you might make when incorporating it into your own agreement. You can find a copy of this agreement that you can easily edit for your own use here.

This Partnership Agreement is meant to be used in conjunction with the Sample Operating procedures which you can find here.

The topics covered represent commonly recommended best practices for operating your club. If you have any doubts about any of these conditions, follow the advice of a lawyer and/or accountant who is familiar with your particular circumstances and the laws of your state.

Partnership Agreement
[PARTNERSHIP NAME]

This AGREEMENT of PARTNERSHIP is effective as of [BEGINNING DATE], by and between the undersigned to wit: things to consider

1. Formation of the Partnership. The undersigned hereby form a General Partnership in accordance with and subject to the laws of the State of [STATE]. things to consider

2. Name. The name of the partnership shall be [REGISTERED CLUB NAME] . things to consider

3. Term. The partnership shall begin on [BEGINNING DATE] and shall continue until it is dissolved as hereinafter provided. things to consider

4. Purpose. The only purpose of the partnership is to invest the assets of the partnership solely in publicly traded individual corporate stocks and bonds, and mutual funds and ETF's (Exchange Traded Funds) made up of those investments, for the education and benefit of the partners. things to consider

5. Meetings. Periodic meetings shall be held as determined by the partnership and described in the partnership Operating Procedures. A quorum of 40% of the active partners must be in attendance at a meeting in order to conduct any business. things to consider

6. Capital Contributions. The partners shall make regular capital contributions to the partnership on the date and in such amounts as the partnership shall determine and specify in the Operating Procedures. However no partner may own more than 2.0 times the percentage of the club that he/she represents to the number of members. For instance, in a club of 10 members, no member may own more than 20% (2 x 1/10 =.20 or 20%) of the capital accounts of all the partners. things to consider

7. Accounting The club will account for its finances and prepare required tax forms using the unit based partnership accounting procedures provided by bivio. Members will receive units of ownership when they make contributions of capital to the partnership. The number of units they receive will be based on the Net Asset Value (NAV) of the partnership (See Paragraph 8) on the date the deposit is made into the partnership brokerage account. Income and expenses will be allocated to each member on the date they occur, based on the number of units of ownership each member has on that date.

   Books of account of the transactions of the partnership shall be kept and at all times be available and open to inspection and examination by any partner. things to consider

8. Value of the Partnership. The Net Asset Value (NAV) of the partnership will be be determined as necessary to conduct club business. NAV for any specific date will be considered accurate when all club transactions have been correctly entered and stock prices have been updated in bivio. The number of units of ownership received for a member payment will be determined by the club's NAV as of the deposit date of the contribution in the club brokerage account (Payment Valuation Date). Member withdrawals will be valued based on the club NAV two business days prior to the club meeting following the meeting at which a withdrawal request is received and accepted. (Withdrawal Valuation Date). things to consider

9. Capital Accounts. A tax basis capital account shall be maintained in the name of each partner. Each partner's contribution to, and capital withdrawals from, the partnership shall be credited, or debited, respectively, to that partner's capital account. Income realized by the club will be allocated to each members capital account on the date it occurs based on members percentage of ownership on that date. Expenses will be allocated as described in the following paragrah. things to consider

10. Expenses. Expenses of the partnership shall be allocated to the partners by their percentage of unit ownership in the partnership (paragraph 7) at the time the expense occurs. However, if the partnership decides by a majority vote at the partnership meeting where the decision to make the expense is made that an expense is deemed to benefit each partner in the same amount, an expense may be divided up and allocated to each partner in an equal amount irrespective of his percentage of ownership at the time. things to consider

11. Annual Accounting. Each calendar year, the partnership will conduct an audit of the accounts and a full and complete account of the condition of the partnership shall be made to all the partners. things to consider

12. Bank Account. The partnership may select a bank for the purpose of opening a bank account. Funds in the bank account shall be withdrawn by checks signed by any partner designated by the partnership in the club Operating Procedures. things to consider

13. Broker Account. None of the partners of this partnership shall be a broker. However, the partnership will select a broker and enter into such agreements with the broker as required for the purchase or sale of securities. Securities owned by the partnership shall be registered in the partnership name.

    Any corporation or transfer agent called upon to transfer any securities to or from the name of the partnership shall be entitled to rely on instructions or assignments signed by any partner without inquiry as to the authority of the person(s) signing such instructions or assignments, or as to the validity of any transfer to or from the name of the partnership.

    At the time of a transfer of securities, the corporation or transfer agent is entitled to assume (1) that the partnership is still in existence and (2) that this Agreement is in full force and effect. things to consider

14. Management. Each partner shall participate in the management and conduct of the affairs of the partnership. Decisions shall be made by a majority of the partners (each partner has 1 vote) in attendance at a meeting unless a special request is made for a vote based on proportional ownership.

    The partnership will adopt Operating Procedures that shall govern the specific conduct of the affairs of the partnership in accordance with this agreement. These Operating Procedures shall be adopted and can be amended from time to time, by a majority vote of the partners present at a club meeting which meets the requirements for conducting club business (Paragraph 5).

    The partnership will elect officers annually. Officer positions, responsibilities and date of the annual election will be specified in the Operating Procedures. things to consider

15. No Compensation. No partner shall be compensated for services rendered to the partnership, except reimbursement for expenses. things to consider

16. Additional Partners. Additional partners may be admitted upon the unanimous consent of the existing partners. The maximum allowable number of partners at any time will be specified in the Operating Procedures. However, the total number of members during a calendar year shall not require the filing of 100 or more K-1 forms for the that year.

    Prior to attaining the status of active membership, a proposed new partner must meet all of the criteria outlined in the current version of the club's Operating Procedures and Criteria for Prospective New Members. things to consider

17. Active Membership. The initial date of a partners active membership shall be set as the date of the meeting when the new partner signs the Partnership Agreement and makes their initial contribution to the club. This meeting shall be no sooner than the meeting immediately following the date when all existing active members vote to accept the new partner. The initial date of active membership shall be used to determine the partners length of active membership. For instance on the first anniversary date (calendar date) of the partner's active membership date, the partner will have accrued one year of active membership and so forth. things to consider

18. Ownership Restrictions. Membership in the club may not be held by any of the following entity types:

    • Partnerships
    • Trusts
    • Foreign entities that would not be treated as a C corporations if they were a domestic entity
    • Any disregarded entity described in IRS Regulations section 301.7701-2(c)(2)(i)
    • A nominee or other similar person that holds an interest on behalf of another person
    • An estate of an individual other than a deceased partner
    
    things to consider

19. Removal of a Partner. Any partner may be removed by agreement of the partners whose capital accounts total a majority of the value of all partners' capital accounts. Conditions for consideration of removal may include but are not limited to, failure to meet attendance requirements (specified in Operating Procedures), failure to make required regular contributions (specified in Operating Procedures) and unauthorized activity undertaken by a partner in the name of the partnership (Paragraph 24).

    Written or email notice of a meeting where removal of a partner is to be considered shall include a specific reference to this matter. Following a vote to remove, the removal shall become effective upon payment of the value of the removed partner's capital account. This shall be done in accordance with the provisions on full withdrawal of a partner(Paragraphs 21 and 22). The vote action shall be treated as the receipt of request for withdrawal. things to consider

20. Termination of Partnership. The partnership may be terminated by agreement of the partners whose capital accounts total a majority in value of the capital accounts of all the partners. Written notice of a meeting where termination of the partnership is to be considered shall include a specific reference to this matter. If a decision to terminate is reached, written or email notice of the decision shall be given to all the partners. Payment shall then be made of all the liabilities of the partnership and a final distribution of the remaining assets either in cash or in kind, shall promptly be made, pending outstanding transactions and a final accounting. Payment will be made to the partners or their personal representatives in proportion to each partner's capital account. things to consider

21. Voluntary Withdrawal (Partial or Full) of a Partner. Any partner may withdraw a part or all of the value of his capital account in the partnership and the partnership shall continue as a taxable entity.

    The partner withdrawing a part or all of the value of his capital account shall give notice of such intention in writing or by email to the partnership officers. Written notice shall be deemed to be received as of the first meeting of the partnership at which it is presented. If written notice is received between meetings it will be treated as received at the first following meeting. things to consider

22. Terms of Payment.

    In making payment, the value of the partnership established on the Withdrawal Valuation Date (paragraph 8), will be used to determine the value of the partner's account.

    The partnership shall pay the partner who is withdrawing the portion of his capital account requested subject to the following constraints in the case of a full withdrawal:

    1. For partners with less than one year of active membership, the withdrawing partner shall receive the lesser of the two following payout amounts:

       1. Ninety-seven percent (97%) of the value of the capital account being withdrawn.

       2. The value of the capital account being withdrawn, less any brokerage fees and any other costs incurred to liquidate the partners account and/or transfer securities.

    2. For partners with greater than one year of active membership the partner shall receive the following pay-out amount:

       1. The value of the capital account being withdrawn, less any brokerage fees and any other costs incurred to liquidate the partners account and/or transfer securities.

    In the case of a partial withdrawal, payment may be made in cash or securities of the partnership or a mix of each at the option of the partner making the partial withdrawal. In the case of a full withdrawal, payment may be made in cash or securities or a mix of each at the option of the remaining partners. In either case, where securities are to be distributed, the remaining partners select the securities. When securities are transferred, the partnership shall select securities equal in value on the Withdrawal Valuation Date (Paragraph 8) to the total or partial value of the partners capital account being withdrawn. The number of shares of securities to be transferred shall be established as of the Withdrawal Valuation Date.

    If securities are being transferred, it shall be within 2 business days of the Withdrawal Valuation Date. Any cash being paid shall be paid within 10 business days after the Withdrawal Valuation Date. Securities will be transferred to an individual account for the withdrawing partner at the same brokerage the partnership is using. The withdrawing partner is responsible for setting up such an account in advance so that the transfer can happen on time. If the withdrawing member chooses to receive the securities in some other method, they will be responsible for any change in value and/or costs associated with processing that request. things to consider

23. Death or Incapacity of a Partner. In the event of the death or incapacity of a partner, receipt of notice shall be treated as a request for a full withdrawal. Payment shall be in accordance with the terms for payment of a full withdrawal (Paragraph 22). It shall be made to the estate of the partner and delivered to the partners last known address. things to consider

24. Forbidden Acts: No partner shall:

    1. Have the right or authority to bind or obligate the partnership to any extent whatsoever with regard to any matter outside the scope of the partnership purpose.

    2. Assign, transfer, pledge, mortgage or sell all or part of his interest in the partnership to any other partner or other person whomsoever, or enter into any agreement as the result of which any person or persons not a partner shall become interested with him in the partnership.

    3. Purchase an investment for the partnership where less than the full purchase price is paid for same.

    4. Use the partnership name, credit or property for other than partnership purposes.

    5. Do any act detrimental to the interests of the partnership or which would make it impossible to carry on the business or affairs of the partnership.

    things to consider

25. Recognition of Risks. Every investment involves a certain element of risk. By signing this agreement, each partner states that he or she understands and accepts these risks, and understands that no returns are guaranteed. Partners further acknowledge that no statements or discussions made as part of the partnerships activities should be construed as individual investment advice. things to consider

26. Amendment of Partnership Agreement. This agreement of Partnership may be amended from time to time upon approval of all the partners whose capital accounts total at least two thirds of the value of all the capital accounts. Written or email notice of the meeting where an amendment of the partnership agreement is to be considered shall include a specific reference and brief description of the matter to be discussed. things to consider

27. Additional Provisions.

    1. This partnership agreement incorporates the [NAME OF PARTNERSHIP] Operating Procedures, a copy of which is attached hereto, and which the partners acknowledge having received and understood.

    2. This Agreement of Partnership shall be binding upon the respective heirs, executors, administrators and personal representatives of the partners.

28. The partners have caused this Agreement of Partnership to be executed on the dates indicated below, effective as of the date indicated above. The signatories have received current copies of the provisions of this agreement and the Operating Procedures. Their signature on one or separate copies of this page shall show their understanding and affirmation of them. things to consider

Partners

List of partner names and addresses along with lines for each to sign and date after their names.