Silent Partner Contract for Nigeria

Silent Partner Contract Template for Nigeria

This document is a comprehensive legal agreement governed by Nigerian law that establishes and regulates the relationship between active business partners and a silent partner (also known as a sleeping partner). It details the terms of capital investment, profit sharing, and liability limitations while ensuring compliance with Nigerian partnership laws, particularly the Partnership Act and CAMA 2020. The agreement carefully balances the silent partner's right to profits and information access with their non-participation in day-to-day business operations, while incorporating necessary protections and confidentiality provisions.

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What is a Silent Partner Contract?

The Silent Partner Contract is essential for businesses in Nigeria seeking private investment without ceding operational control. This document is typically used when an investor wishes to provide capital while maintaining anonymity and limiting their involvement in business operations. It addresses key aspects such as investment terms, profit sharing mechanisms, liability limitations, and exit provisions, all within the framework of Nigerian law, particularly the Partnership Act and CAMA 2020. The agreement is crucial for protecting both the silent partner's investment and the active partners' operational autonomy, while ensuring compliance with Nigerian regulatory requirements regarding partnerships, investments, and tax obligations. This document type is particularly relevant in situations where businesses need additional capital injection but wish to maintain their existing management structure and decision-making processes.

What sections should be included in a Silent Partner Contract?

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

2. Background: Context of the partnership formation, business purpose, and silent partner's role

3. Definitions: Key terms used throughout the agreement, including 'Silent Partner', 'Business', 'Investment Amount', 'Profits', etc.

4. Investment Terms: Details of the silent partner's capital contribution, including amount, payment schedule, and form of investment

5. Profit Sharing and Distributions: Formula and mechanics for calculating and distributing profits to the silent partner

6. Rights and Limitations: Clear delineation of silent partner's rights and limitations, emphasizing non-involvement in management

7. Representations and Warranties: Statements of fact and assurances from both parties regarding their capacity and authority

8. Confidentiality: Obligations to maintain confidentiality of business information and partnership terms

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

10. Exit Provisions: Mechanisms for partner withdrawal, buyout terms, and valuation methods

11. Governing Law and Jurisdiction: Specification of Nigerian law as governing law and jurisdiction for disputes

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

1. Tag-Along Rights: Used when the silent partner wants the right to join in any sale by active partners

2. Foreign Investment Provisions: Required when the silent partner is a foreign investor, addressing NIPC requirements

3. Information Rights: Details additional reporting requirements if the silent partner requests enhanced visibility

4. Death/Incapacity Provisions: Specific provisions for handling the silent partner's interest in case of death or incapacity

5. Anti-Dilution Protection: Used when there's possibility of additional investment rounds or partnership expansion

6. Tax Structuring: Detailed tax provisions when complex tax planning is involved

7. Dispute Resolution: Alternative dispute resolution mechanisms beyond court jurisdiction

What schedules should be included in a Silent Partner Contract?

1. Schedule 1: Investment Details: Detailed breakdown of investment amount, payment schedule, and bank details

2. Schedule 2: Profit Calculation Formula: Detailed methodology for calculating distributable profits

3. Schedule 3: Business Plan: Overview of business operations and projections (for reference only)

4. Schedule 4: Reporting Template: Format for periodic financial reports to be provided to silent partner

5. Appendix A: KYC Documents: Copies of required identification and verification documents

6. Appendix B: Corporate Documents: Relevant business registration and corporate documents

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

Nigeria

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Real Estate

Technology

Manufacturing

Retail

Agriculture

Oil and Gas

Financial Services

Healthcare

Hospitality

Construction

Mining

Transportation

Entertainment

Education

Relevant Teams

Legal

Finance

Corporate Secretariat

Compliance

Risk Management

Investment

Tax

Executive Leadership

Business Development

Corporate Governance

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Legal Counsel

Investment Manager

Business Development Manager

Corporate Secretary

Finance Director

Managing Partner

Investment Analyst

Risk Manager

Compliance Officer

Tax Advisor

Private Equity Manager

Venture Capitalist

Business Owner

Industries
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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