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What is the Participation Association Agreement

With the Partnership Agreement a subject, the associate, assigns to another, the associate in participation, the right to share in the profits of a company, one of its branches of the activity, or those of a specific business.

This agreement allows the associate to participate in the profits without becoming a partner of the associate. The member, in fact, limits himself to conferring money or goods of any kind. The associate, on the other hand, benefits from the contributions without changing the shareholder structure and without turning to the credit market.

The partnership agreement must be drawn up in writing when the law provides for it. For example, when real estate is conferred. However, even when a particular form is not required, it is recommended to draw up a joint venture agreement in writing to clearly establish the type of contribution requested, the duration of the contract, the percentage of profits to which the member is entitled, etc.

When using the profit-sharing agreement

The profit-sharing agreement may be signed either by individuals or by legal entities. When both the associate and the associate are companies, we speak of a joint venture between companies. In particular, companies are present when the subjects are companies or individual enterprises organized to carry out an activity of production of goods or services, for profit.

This document is used both when the associate participates in all the profits of a company or one of its branches and when it participates in the profits of a specific business. For example, a hotel entrepreneur in economic difficulties can turn to an investor who, in exchange for the necessary liquidity, participates in the profits of the company. Another hypothesis is that of the building contractor who receives the funds to start the construction of an industrial warehouse from an investor who in exchange participates in the proceeds of the future sale of that specific building.

A company or association (eg Srl, Srls, cultural or sporting associations) is not created with the partnership agreement. In this case, it is necessary to use a Statute and Deed of Incorporation for Srl or simplified Srl or a Statute and Deed of Incorporation for Association.

In addition, the profit-sharing or business of a company contract should not be confused with the joint venture contract. In the latter case, all parties to the contract participate in the management of the joint venture to achieve a common purpose. In the association in participation, however, the member cannot participate in the management but must limit himself to the conferment.

The association in participation with the contribution of work

Until 2015, the associate in participation as a natural person could confer a work performance within the limits established by law. In particular, the Former reform had limited the contribution of work in the same activity to a maximum of three associates.

Starting from 25 June 2015, the contribution of the associated natural person can no longer consist, even in part, in work performance. In any case, participation contracts signed before 25 June 2015 remain valid until the deadline even if they provide for a job contribution.

The prohibition of a joint venture with the contribution of work does not apply to legal persons who can participate in the company totally, or even only partially, with the contribution of work.

What is contained in the model of the partnership agreement in participation

Our partnership agreement meets all legal requirements. The main clauses concern:

  • Type: to specify whether the participation concerns the profits of the company or the profits of a single business
  • Contribution (contribution): to choose between contributions in cash or capital goods and describe them in detail
  • Method of contribution: in the case of a cash contribution, to specify the methods of contribution and the time of payment
  • Quota: to indicate the percentage of profits to which the associate will be entitled and the time of payment of the profits
  • Losses: to choose who will pay any losses (only the associating company or also the associate)
  • Data of the parties: to identify the company and the associate which can be both natural and legal persons
  • Jurisdiction: to specify the competent court in case of disputes

Once you have downloaded your document, we will guide you step by step to complete all the necessary subsequent tasks.

Information you need

All parts data are required to complete the document. If you don’t know where to find this information we will help you during the guided interview.

Remember that our interview does not generate a simple facsimile of a participation contract. Based on your answers, the system automatically draws up a customized contract model for your exact needs, guaranteeing its legal correctness.

The document can be modified in all its parts without time limits. Don’t worry so if you don’t have all the information available during the interview, you can always enter it later.

Other names

  • joint interest agreement
  • associative contract
  • partnership agreement
  • a joint venture between companies

Other useful templates and facsimiles

  • Confidentiality Agreement: to protect you when you need to share confidential information
  • Term Sheet for Investments: to determine the main points on which the future investment agreement will be based
  • Articles of Association and Ordinary Srl Constitutive Act: to create the founding documents of a single-member limited liability company or with several partners and regulate its operation
  • Simplified By-Laws and Deed of Incorporation: to create the founding documents of a simplified single-member or multi-member limited liability company and regulate its operation
  • Association statute and articles of association: to create a non-profit association or change the statute of your association