Non Equity Partner Agreement for the United Kingdom

Non Equity Partner Agreement Template for England and Wales

A Non-Equity Partner Agreement is a legal document governed by the laws of England and Wales that establishes the terms and conditions under which a senior professional joins a partnership without making a capital contribution or taking an ownership stake. The agreement defines the partner's rights, responsibilities, compensation structure, and participation in management, while maintaining the distinction from equity partners. It incorporates provisions from the Partnership Act 1890 and other relevant legislation, ensuring compliance with English partnership law principles.

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What is a Non Equity Partner Agreement?

The Non-Equity Partner Agreement serves as a crucial document for professional services firms operating in England and Wales who wish to extend partnership status to senior professionals without granting equity ownership. This agreement type has become increasingly common as firms seek to retain and reward top talent while maintaining control over equity ownership. The document typically covers areas such as profit sharing, voting rights, management participation, and professional obligations, while ensuring compliance with English partnership law. It's particularly relevant for growing firms looking to create a tier between senior employees and full equity partners, offering a stepping stone to full partnership.

What sections should be included in a Non Equity Partner Agreement?

1. Parties: Identification of the partnership and the incoming non-equity partner

2. Background: Context of the agreement and partnership structure

3. Definitions: Key terms used throughout the agreement

4. Appointment and Status: Terms of appointment and classification of partner status

5. Duties and Obligations: Partner responsibilities and performance expectations

6. Remuneration: Compensation structure, profit share, and benefits

7. Governance: Decision-making rights and voting powers

8. Termination: Circumstances and procedures for ending the relationship

What sections are optional to include in a Non Equity Partner Agreement?

1. Capital Contribution: Required if partner must make financial contribution - use when partner is required to make capital investment

2. International Practice: Rules for cross-border practice - use for partnerships with international operations

3. Professional Indemnity: Special insurance provisions - use for regulated professions or high-risk sectors

What schedules should be included in a Non Equity Partner Agreement?

1. Partner Compensation Schedule: Detailed breakdown of compensation structure

2. Partner Obligations: Detailed list of specific duties and responsibilities

3. Restrictive Covenants: Post-termination restrictions and non-compete provisions

4. Benefits Package: Details of additional benefits and allowances

5. Performance Metrics: KPIs and performance evaluation criteria

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 | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Partnership Act 1890: Fundamental partnership legislation that defines basic rights and duties of partners, providing default provisions if not explicitly addressed in agreement

Limited Liability Partnerships Act 2000: Governs LLP structures and corporate aspects of LLP partnerships, crucial if the firm operates as an LLP

Companies Act 2006: Relevant for partnerships with corporate elements and where partners serve as directors, defining director duties and corporate governance requirements

Employment Rights Act 1996: Addresses the employment status of non-equity partners, defining potential worker/employee rights and protections that may apply

Equality Act 2010: Covers anti-discrimination provisions, equal treatment obligations, and protection of characteristics in the partnership context

Data Protection Act 2018 & UK GDPR: Regulates handling of personal data and privacy considerations within the partnership

Competition Act 1998: Relevant for structuring restrictive covenants and non-compete provisions in the partnership agreement

Financial Services and Markets Act 2000: Applicable for partnerships involving regulated activities, defining compliance requirements and regulatory obligations

Common Law Principles: Encompasses fiduciary duties, duty of good faith, and confidentiality obligations that apply to partnership relationships

Tax Legislation (Income Tax Act 2007): Covers partnership tax provisions and treatment of drawings and profit shares for non-equity partners

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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