Profit-Share Agreement

Description

• A Profit-Share Agreement is a legally binding contract between two or more parties that outlines the terms for sharing profits generated from a joint business venture, partnership, or collaboration. It establishes the responsibilities, contributions, and profit allocation among the involved parties.

GOV Department

• Suruhanjaya Syarikat Malaysia (SSM) / Companies Commission of Malaysia

License Type

• Perjanjian Perkongsian Keuntungan

Details

• Specifies the profit-sharing ratio or percentage for each party.
• Defines the contributions of each party, such as capital, labor, or resources.
• Outlines the accounting methods, timelines, and procedures for profit distribution.
• Includes provisions for managing losses, termination, and dispute resolution.
• Ensures compliance with the Partnership Act 1961 or other relevant laws.

Important Rules

• All parties must agree to and sign the agreement to make it enforceable.
• The agreement must clearly state the profit-sharing formula and the timeline for distribution.
• Any changes to the agreement require mutual consent and documentation.
• Profits and losses must be accounted for transparently and in compliance with applicable tax laws.
• The agreement must include provisions for dispute resolution to address conflicts.

Compound & Punishment

• Failure to formalize a profit-share agreement may lead to:
  • Disputes over profit allocation or contributions.
  • Legal action or dissolution of the business relationship.
• Breach of the agreement may result in:
  • Financial penalties or compensation claims by aggrieved parties.
  • Loss of rights to future profits or partnership assets.
• Non-compliance with tax obligations related to profit distribution may result in fines or penalties from regulatory authorities.

Advisor