Partnership Agreements- The treasurers' perspective (Managment)
I'm the treasurer of a new club and we are in the process of writing our partnership agreement.   Specifically, as treasurer, what issues should I be most concerned with?
Your partnership agreement should clearly define how your club will make decisions on investments, new members, modifications to your partnership agreement, etc..    The question is, how should voting be handled?   
Most clubs handle voting one of two ways...... in proportion to each partners interest in the club or equally, where each member receives one vote regardless of the relative size of their capital account.   Both methods offer pro's and con's.  So, let's look at each method a little closer.
Equal votes, where each member is entitled to one vote regardless of their investment in the club, is just like the votes we make in most political elections.  In this democratic type system everyone is treated equally.    Many clubs are founded with the education of their members as a key goal.   As such, many of these clubs, the Triple E Investment Club for example, feel that this democratic system is best for them.   All members, including new members with a relatively small dollar amount invested, have an equal say in the management decisions of the club.
On the other hand, some clubs choose a methodology where each member participates in the management of the club in proportion to their interest in the club.    For example, the Mutual Investment Club of Detroit uses this method.   This system mirrors the method that we, as stockholders, use when we vote our proxies each year.   If you as a stockholder own 10% of a company, you are entitled to 10% of the votes cast at the annual meeting, regardless of the total number of stockholders.   As your club matures you may find that some members have substantially larger investments in the club.   Is it appropriate for new members, who have a very small amount of capital at risk, to enjoy the same control over the management of the club as those members with a great amount of capital at risk?   Maybe, maybe not, it's up to the members of your club to decide.  
You might ask, if we choose the proportional ownership method of club management, how do we administer the vote?   It's easy with bivio!    Simply go to your club area in bivio.  Select Accounting | Members to see the percentage of the club that is owned by each member.   Assume for a moment that Member A owns 5%, Member B owns 8%, Member C owns 14%, etc.   When each of these members vote they will get a number of votes equal to their percentage holdings in the club.   In other words, Member A gets 5 votes, Member B gets 8 votes, and so on.
Taking this discussion one step further, your club may decide to use some variation or combination of these two methodologies.   For example, some clubs use equal votes for making decisions about the administration of the club, which might include voting on modifications to the partnership agreement and bylaws, while employing proportional ownership votes when making investment decisions.   For simplicity, some other clubs use equal votes in all situations unless a member calls for a proportional vote, then the proportional voting method must be used.
And finally, you'll want to consider the use of quorums and proxies.   Do you want to require a certain minimum representation when voting on security purchases and sales?  How about amendments to the partnership agreement?   Will you allow proxies for absent members?  
As you can see, the management of your club is an important issue that must be clearly defined and understood by each member of your club.
In our next installment, let's discuss withdrawals and their treatment in a partnership agreement.
Until then, and as always, feel free to send you questions, comments, and suggestions to Trez_Talk.
St.Louis, Missouri