Free Operating Agreement Template
Operating Agreement
This Operating Agreement, which will from henceforth be referred to as the "Agreement", is confirmed to be in effect and becomes officially active starting from the date specified as the [Effective Date].
This agreement has been collectively drawn up and agreed upon by the two parties involved in the contractual agreement, who are [Your Name] and [Client's Name].
I. FORMATION
The partners mutually affirm and acknowledge that the partnership entity was appropriately and accurately formed, strictly adhering to the laws, statutes and other necessary formalities of the jurisdiction where it is based.
Furthermore, it is agreed upon by the partners that the existence and continuity of this partnership shall remain intact and unaltered until such a time when a formal cancellation is processed.
This cancellation must be in line with, and in full comprehension of, the specific provisions, clauses and terms that have been established within this Agreement.
II. PURPOSE
This Agreement is a formal document that stipulates the specific terms and conditions that have been mutually agreed upon by all of the involved parties.
These agreed upon terms and conditions are particularly in relation to the manner in which the partnership affairs are to be conducted and assigned responsibilities and rights of each of the individual partners within the partnership.
The mission or primary purpose of creating this partnership is to engage in lawful acts or activities that are permissible under the statutes for which a partnership can be formed.
III. CAPITAL CONTRIBUTIONS
Each partner participating in the partnership is required to make an initial contribution of capital towards the establishment of the partnership. The amount of this initial investment will be decided on a mutual basis, agreed upon by all parties involved.
This initial contribution will be adequately large enough to cover the expenses associated with starting the business. Moving forward, any further contributions that may be required in the future in order to successfully continue running the business will also be subject to a decision that will be taken jointly by each and every party to the agreement.
This ensures that every decision made is in alignment with the terms agreed upon mutually by all parties involved.
IV. DISTRIBUTION OF PROFITS AND LOSSES
The business partnership will be subjected to routine checks in which the profits and losses it has accumulated over a certain period will be calculated. This evaluation will help determine each partner's share from the accumulated profits or losses.
The process of computing and allotting these shares among all partners involved in the business will be carried out on an equitable basis. This fair division of shares will take place every quarter, which essentially implies that this procedure will take place four times within a financial year.
Following the execution of this distribution process, further steps will be taken to reflect the changes this distribution causes in the capital accounts of each partner involved in the business.
The capital accounts owned by each of these partners will be adjusted accordingly as a reflection of the changes brought forth by the equitably divided shared profits and losses.
The adjustment of these accounts will ensure that each account accurately reflects the overall financial status of each partner after the distribution.
V. MANAGEMENT AND CONTROL
The rules and regulations surrounding the management of the partnership will be dictated by a policy of collaboration and mutuality between the two partners involved in said partnership.
This means that each aspect of the partnership will not be handled by one party alone, but instead will require a joint effort, ensuring equal involvement and responsibility shared by both partners.
Furthermore, all decisions that are made in the context of this partnership will not simply be passed along for mere acknowledgment - they will require the active approval and explicit consent of both parties involved in the partnership.
Everyone involved must agree on the decision before it is implemented, marking a clear departure from unilateral decision-making processes.
This policy of mutual consent and approval becomes even more stringent, carrying an extra layer of stringency, when it comes to decisions that have a direct impact on the running, operation, and administration of the partnership.
Any decisions in these areas will need to undergo an especially thorough process of approval from both partners, further emphasizing the joint nature of the partnership management.
VI. TERMINATION
In the instance that the Partnership experiences either a cessation of operations or is dissolved, any and all issues, situations, or elements pertaining to the Partnership itself are required to be addressed, clarified, and brought to a resolution.
In addition to this, all of the assets that belong to or are associated with the Partnership shall be directed towards their appropriate places, or scattered among the relevant recipients, as is dictated in the guidelines set out by the Partnership Act. The proceedings will also be conducted in a manner that adheres to the terms and conditions detailed in this Agreement.
Within this context, it should also be noted that any factors, entities, or persons that are involved or have a stake in the Partnership are legally entitled to request, at any given time, a comprehensive and fully detailed report.
It is their prerogative to demand such a report, particularly if it pertains to the showcasing of the entirety of the business transactions that have been conducted within the framework of this Partnership.
This documentation is necessary to provide full transparency regarding the economic activities, exchanges, and deals associated with the Partnership, and to ensure that these processes have been carried out in a lawful manner.
VII. AMENDMENT
As per the stipulations laid out within this agreement, it is important to comprehend that in case there arises a need for any kind of editorial changes or modifications, the acceptable way to put them into effect is solely by utilizing a document that is provided and written down, which subsequently needs to be signed.
It is crucial for this document to have undergone approval and received unanimous consent from all the parties involved in the partnership.
It is imperative that all concerned parties understand and acknowledge that should there be any propositions or alterations made on a verbal level or any changes that have been discussed orally in reference to the terms and conditions associated with this agreement, such modifications or suggestions will be considered absolutely null and void.
The aforementioned verbally suggested amendments will not possess any legal strength or binding significance and will not be recognized in a court of law under any circumstance.
VIII. GOVERNING LAW
The laws of the home jurisdiction shall govern this Agreement. Both parties consent to jurisdiction in the home jurisdiction, agree to accept service of process by mail, and hereby waive any jurisdictional or venue defenses otherwise available.
IN WITNESS WHEREOF, the partners have executed this Operating Agreement as of the first date above written.
[Your Name]
[Date Signed]
[Client's Name]
[Date Signed]
