Silent Partner Agreement Template for Belgium

A Silent Partner Agreement under Belgian law is a legally binding contract that establishes a partnership where one party (the silent partner) provides capital investment but does not participate in the business's daily operations or management. This agreement, governed by the Belgian Code of Companies and Associations, outlines the terms of investment, profit-sharing arrangements, rights and obligations of both active and silent partners, while maintaining the silent partner's limited role and liability. The document addresses key aspects such as capital contributions, profit distribution, reporting requirements, and termination conditions, all while ensuring compliance with Belgian partnership and tax regulations.

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What is a Silent Partner Agreement?

The Silent Partner Agreement is a crucial document used in Belgian business arrangements where an investor wishes to participate financially in a business venture without taking an active management role or public position. This type of agreement is particularly relevant under Belgian law, where it's known as "Stille Vennootschap" in Dutch or "Société Interne" in French. The document is essential when structuring private investment arrangements, especially in cases where the investor wants to maintain confidentiality while providing capital to an existing or new business. The agreement covers critical aspects such as initial investment, profit-sharing mechanisms, reporting obligations, and exit strategies, all while ensuring compliance with Belgian regulatory requirements, including the Code of Companies and Associations. It's particularly useful for businesses seeking private capital without wanting to alter their public management structure or for investors looking to make passive investments with defined returns.

What sections should be included in a Silent Partner Agreement?

1. Parties: Identification of the active partner(s) and silent partner(s), including full legal names, addresses, and registration details where applicable

2. Background: Context of the partnership formation, including the business purpose and general intent of the parties

3. Definitions: Definitions of key terms used throughout the agreement

4. Partnership Structure: Legal structure of the partnership, confirming its nature as a silent partnership under Belgian law

5. Capital Contributions: Details of initial and any agreed future capital contributions by the silent partner

6. Profit and Loss Sharing: Agreement on how profits and losses will be distributed between partners

7. Management and Control: Confirmation that active partner(s) maintain full control and management of the business

8. Silent Partner's Rights: Specific rights of the silent partner, including information and inspection rights

9. Confidentiality: Obligations regarding business information confidentiality

10. Duration and Termination: Term of the partnership and conditions for termination

11. Governing Law: Confirmation of Belgian law as governing law and jurisdiction

What sections are optional to include in a Silent Partner Agreement?

1. Non-Competition: Restrictions on silent partner's involvement in competing businesses, if applicable

2. Transfer of Interest: Rules regarding the transfer of the silent partner's interest, if permitted

3. Additional Capital Calls: Procedures for requesting additional capital from the silent partner

4. Tag-Along Rights: Rights of the silent partner to participate in sale of business, if granted

5. Dispute Resolution: Alternative dispute resolution procedures, if preferred over court proceedings

6. Insurance Requirements: Specific insurance obligations for the business

7. Exit Strategy: Detailed procedures for partner exit beyond basic termination provisions

What schedules should be included in a Silent Partner Agreement?

1. Schedule 1 - Initial Capital Contribution: Detailed breakdown of the silent partner's initial capital contribution

2. Schedule 2 - Business Plan: Current business plan and financial projections

3. Schedule 3 - Profit Calculation Method: Detailed methodology for calculating distributable profits

4. Schedule 4 - Reporting Requirements: Format and frequency of financial reports to be provided to silent partner

5. Schedule 5 - Existing Business Assets: Inventory of existing business assets at partnership formation

6. Appendix A - Partner Details: Detailed information about all partners including contact information

7. Appendix B - Bank Account Details: Banking information for capital contributions and profit distributions

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Belgium

Publisher

Genie AI

Cost

Free to use

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