Profit Sharing Agreement for New Zealand

Profit Sharing Agreement Template for New Zealand

A comprehensive legal document governed by New Zealand law that establishes and regulates the sharing of profits between two or more parties. This agreement defines the method of calculating profits, distribution mechanisms, timing of payments, and related rights and obligations of all parties involved. It includes provisions for financial reporting, audit rights, dispute resolution, and compliance with New Zealand tax regulations. The document is structured to provide clarity on profit calculation methodologies while ensuring compliance with relevant New Zealand legislation, including the Companies Act 1993 and Income Tax Act 2007.

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What is a Profit Sharing Agreement?

A Profit Sharing Agreement is essential for businesses and individuals in New Zealand who wish to formalize arrangements for sharing business profits. This document is commonly used in various scenarios, including business partnerships, joint ventures, employee incentive schemes, and investment arrangements. The agreement must comply with New Zealand legislation, including the Companies Act 1993, Income Tax Act 2007, and Contract and Commercial Law Act 2017. It typically includes detailed provisions for profit calculation, distribution mechanisms, reporting requirements, and dispute resolution procedures. This type of agreement is particularly important for establishing clear expectations and avoiding future disputes regarding profit allocation and distribution. The document should be tailored to specific business needs while ensuring compliance with New Zealand tax regulations and corporate law requirements.

What sections should be included in a Profit Sharing Agreement?

1. Parties: Identifies and defines all parties to the agreement, including their legal status and contact details

2. Background: Outlines the context and purpose of the agreement, including the business relationship between the parties

3. Definitions: Defines key terms used throughout the agreement, including 'Profit', 'Accounting Period', and other relevant terminology

4. Term and Commencement: Specifies when the agreement begins and its duration

5. Profit Calculation: Details the method for calculating profit, including allowable deductions and accounting principles to be applied

6. Profit Distribution: Specifies the agreed profit sharing ratios and timing of distributions

7. Payment Terms: Outlines the mechanics of how and when profit shares will be paid

8. Accounting and Records: Details requirements for maintaining financial records and conducting audits

9. Reporting Requirements: Specifies the financial reports to be prepared and shared

10. Confidentiality: Establishes obligations regarding confidential information

11. Dispute Resolution: Outlines the process for resolving disagreements

12. General Provisions: Standard legal clauses including notices, amendments, governing law, etc.

What sections are optional to include in a Profit Sharing Agreement?

1. Management Rights: Include when parties have specific management responsibilities or decision-making powers

2. Intellectual Property: Include when the profit sharing involves IP rights or creation

3. Non-Competition: Include when parties need to be restricted from competing activities

4. Exit Provisions: Include detailed procedures for parties leaving the arrangement

5. Force Majeure: Include when specific provisions for unforeseen circumstances are needed

6. Tax Provisions: Include detailed tax handling procedures when complex tax implications exist

7. Employee Participation: Include when the agreement involves employee profit sharing schemes

8. International Considerations: Include when profit sharing involves international parties or transactions

What schedules should be included in a Profit Sharing Agreement?

1. Schedule 1 - Profit Calculation Methodology: Detailed formulae and procedures for calculating profit

2. Schedule 2 - Distribution Framework: Detailed breakdown of profit sharing percentages and thresholds

3. Schedule 3 - Accounting Principles: Specific accounting standards and practices to be followed

4. Schedule 4 - Reporting Templates: Standard formats for financial reports and statements

5. Schedule 5 - Key Performance Indicators: Metrics used to measure performance and profit calculations

6. Appendix A - Initial Financial Projections: Baseline financial expectations and projections

7. Appendix B - Authorized Representatives: List of individuals authorized to act on behalf of each party

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

New Zealand

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Professional Services

Technology and Software

Retail and Consumer Goods

Manufacturing

Construction and Real Estate

Financial Services

Healthcare

Hospitality and Tourism

Agriculture and Farming

Media and Entertainment

Consulting

Education and Training

Mining and Resources

Transport and Logistics

Relevant Teams

Legal

Finance

Executive Leadership

Human Resources

Accounting

Tax

Compliance

Operations

Business Development

Investment

Corporate Affairs

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Managing Director

Finance Director

Business Owner

Partner

General Counsel

Legal Counsel

Financial Controller

Account Manager

Business Development Manager

HR Director

Company Secretary

Investment Manager

Operations Manager

Partnership Manager

Compliance Officer

Tax Manager

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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