A contract, in general terms, is a phenomenon that involves the conjunction of two or more wills (as a general rule).
They come from capable subjects of law, who decide on the realization of a common interest, of a concrete legal operation.
What is a Partnership Agreement?
In the specific case of study, the partnership agreement is an agreement according to which one or more persons undertake to make a contribution in money, in labor, or in other assets appraisable in money, in order to divide among themselves the profits obtained in the company or social activity; the latter paraphrasing the definition used by the Code of Commerce in conjunction with Law 1258 of 2008.
Partnership agreement in Colombia
This contract has far-reaching legal effects, since it is an instrument that makes it possible to create an additional and new legal entity, a legal person capable of exercising rights and obligations on its own account. Thus, the partnership contract is the key that creates the legal fiction, which is extremely useful for the exercise of the market economy that we have been witnessing in Colombia since the political constitution of 1991.
Elements of the partnership agreement
The corporate contract is materialized through a document known as the “articles of incorporation” or “corporate bylaws”. In this document, all aspects relevant to the company are decided, among which the following are highlighted:
- The corporate name
Which can be a firm name or a corporate name, serving to provide identity to the new legal entity that will be created. - The registered office
The place where the main business center of the legal entity will be established. - The corporate purpose
This will be the mission for which the company is created; it is the business niche to which the new company will be dedicated. This description will be its field of action and legally marks the limits of the capacity of this legal fiction. - The share capital
The investment promise of the shareholders, it is the amount they decide to put at risk in the business venture; this is usually classified into authorized, subscribed, and paid-in capital. In turn, these can be divided into interest parts, quotas, or shares (the latter being the most common and can be of various types, namely, ordinary, preferential, and other typologies). - Corporate bodies and their operation
All corporate bodies that will carry out the administration of the company’s social purposes must be defined, among which the assemblies of partners or shareholders, boards of directors, legal representatives, and others stand out. - Others
Finally, there is a wide additional variety of natural and accidental clauses, such as: the right of first refusal, the legal reserve, the method of conflict resolution, among others. This depends largely on the type of company chosen; in any case, these rules are valuable and important, making it relevant for a lawyer to support the selection of these and other possibilities.
Types of companies in Colombia
In our legislation there are various types of companies, with two types being the most important today: simplified joint-stock companies and corporations, the former being the newest and at the same time the most used and important in the Colombian market.
These two types of companies are capital-based, with limited liability and serve to carry out a wide variety of businesses. However, it is relevant to specify that simplified joint-stock companies are much more flexible and light, optimal for emerging companies. Meanwhile, corporations are currently the only ones authorized to participate in the Colombian stock exchange, hence they serve larger and more consolidated companies.
The partnership agreement is a complex contract, extremely important socially and economically speaking. For this reason, it is transcendental that it be drafted by expert lawyers in corporate matters to guarantee that the rules of the game established between the partners allow them to maintain lasting and successful relationships.
Cuadro Legal, your trustworthy lawyers in Medellín
Author: Santiago Pinzon Sosa
