Partnership Deed in Kenya

Partnership Deed in Kenya

A Partnership Deed outlines the framework for a partnership, ensuring clarity in rights, responsibilities, and operations. Below are its key requirements and essential clauses. A partnership deed is crucial in the event of disagreements in a partnership.

Legal Requirements

A valid partnership deed must:

• Identify partners with legal capacity.
• Indicate an intention to form a binding partnership.
• Define mutual obligations as consideration.
• Serve a lawful purpose.
• Specify start and end dates, if applicable.
• Be signed by all partners.

Essential Clauses

1. Parties and Business

List all partners and outline the partnership’s business purpose, which must be lawful.

2. Capital Contribution

Specify total capital and each partner’s contribution.

3. Management Structure

Define partner roles and responsibilities:

• Meeting schedules and procedures.
• Voting rights (e.g., one vote per partner or proportional to contributions).
• Appointment of managing partners and hiring staff.

4. Financial Provisions

• Grant all partners access to records and accounts.
• Specify financial reporting (e.g., annual or quarterly).
• Include audit and record-keeping provisions.

5. Partnership Property

Define partnership property as assets used for business purposes, including those acquired during operations.

6. Partner Obligations

Partners must act in good faith, disclose material information, avoid conflicts of interest, and promote the partnership’s best interests.

Membership and Contracts

Membership

Outline how partners join or exit. New partners sign a deed of adherence.

Contracts

• Partners can bind the partnership unless limited by the deed.
• Specify financial thresholds for contracts.

Liability

Partners are jointly and severally liable for debts incurred during their tenure and up to 12 months after leaving unless public notice of resignation is issued.

Dissolution

A partnership ends through:

• Fulfillment of purpose or expiration of term.
• Mutual agreement.
• Resignation or death of a partner in a two-partner arrangement.
• Court or Registrar’s order due to illegality or breach.

FAQs

1. Why is a partnership deed important?
   It ensures clarity and reduces disputes among partners.
2. Can a deed be amended?
   Yes, with the mutual consent of all partners.
3. What happens if there is no deed?
   General rules under the Partnership Act apply, which may not suit all partnerships.