Investment Club Partnership Agreement

__________, hereby establish a general partnership under the name ______ Investment Club.

The partnership shall commence on _____________________ and will continue for five (5) years. Thereafter, it shall automatically renew annually unless terminated earlier in accordance with this Agreement.

Each partner shall, on or before , make an initial capital contribution of $ (____ and __/100 dollars).

Additional capital contributions of not less than $____ (____________________ and ___/100 dollars) may be made by partners during regular meetings. However, no single partner’s contribution may exceed _______ percent of the total capital of the partnership at any time. Profits and losses will be distributed in proportion to each partner’s capital account relative to the total partnership capital.

A complete and accurate set of books shall be maintained to record all partnership transactions. An annual report summarizing the partnership’s performance will be presented to the partners. Books shall be available for inspection by any partner during reasonable hours. By vote, the partners may appoint a professional accounting firm to handle bookkeeping and related services. While an audit is not mandatory, one may be conducted upon majority vote of the partners.

An official depository for partnership funds shall be designated by vote. Withdrawals from this account will require the signature of partners.

Meetings and Governance

The partnership shall hold regular meetings at least once every quarter. Meeting times and locations shall be determined by partner vote. At the first regular meeting, the partners shall elect a presiding officer, by majority vote, who will serve as the Chairman. Meetings shall generally follow Robert’s Rules of Order where applicable. A new Chairman shall be elected annually.

Any partner may appoint another partner (and only another partner) as their proxy for any meeting, provided the proxy is in writing. Voting rights will be based on the percentage of capital owned. No quorum is required for routine business. However, a quorum—based on capital percentages as of the meeting’s start—is required for:

(a) Dissolution or termination of the partnership;
(b) Amendments to the partnership agreement.

All other decisions require only a simple majority of capital-based votes. For dissolution or amendments, a two-thirds (2/3) majority is required.

Special meetings may be called by majority vote, with at least ten (10) days’ prior written notice to all partners.

Partner Rights and Restrictions

Each partner has the right to participate in managing the partnership, including making investment selections. No partner may bind or obligate the partnership without a vote authorizing such action.

The partnership may not engage in business with any financial institution, broker, or bank in which a partner has a financial interest or is employed, unless:

The partner discloses the interest; and

The remaining partners approve by majority vote.

This restriction does not apply to publicly traded shareholdings of less than 5% of total shares. All conflicts of interest must be disclosed.

Transfer and Admission of Partners

No partnership interest may be assigned or transferred without approval from a majority of the partners. Such approval shall not be unreasonably withheld.

New partners may be admitted by majority vote. The minimum initial contribution for new partners shall be $_____ (_______________________ and ___ /100 dollars), subject to change not more than once per year by partner vote.

The total number of partners shall not exceed _____________________.

Investment Restrictions

The partnership shall not purchase securities on margin. It is also prohibited from investing in the following types of assets:

Brokers may be designated by partner vote, but discretionary trading authority may not be granted to any broker.

Withdrawal, Death, or Incapacity of a Partner

A partner may withdraw from the partnership by providing written notice. Withdrawal does not automatically dissolve the partnership unless the remaining partners decide not to continue.

Upon withdrawal, the departing partner shall be paid the value of their capital account within 30 days. If liquidation of securities is required to make this payment, the payout may be postponed by up to 14 additional days for a vote on which assets to liquidate.

The withdrawing partner shall sign a hold harmless agreement in favor of the partnership and all other partners.

If a partner dies, becomes incapacitated, or is legally disabled, such event shall be treated as a withdrawal, and the capital account shall be returned under the same terms.

Additional Terms

1. Notices

Any notice required or permitted under this Agreement must be in writing and delivered either personally or via a recognized overnight delivery service (e.g., FedEx). See Exhibit 1 for each partner’s name and address.

2. No Waiver

A party’s failure to enforce any right or provision of this Agreement shall not constitute a waiver of any other rights or remedies.

3. Entire Agreement

This Agreement constitutes the complete and exclusive understanding between the parties regarding its subject matter. No oral or written agreements or understandings not specifically incorporated herein shall be considered binding. Changes must be made in writing and signed by all parties.

4. Governing Law

This Agreement shall be governed by and interpreted in accordance with the laws of the State of ____________________. Any legal proceedings related to this Agreement must be brought in that jurisdiction.

5. Headings

Section headings are provided for convenience and do not affect the substance or interpretation of this Agreement.

6. Severability

If any provision of this Agreement is deemed unenforceable by a court, all remaining provisions shall remain in full force and effect.
In Witness Whereof, the parties have executed this Agreement as of the date first written above.

Each PartnerEach Partner

Each PartnerEach Partner

Each PartnerEach Partner

If additional partners exist, they should also sign below.

Date:

Exhibit One: Names & Addresses of all partners for contact purposes

How to Use This Sample Format

This guide explains how to use the enclosed sample agreement effectively. Media representations of investment clubs—such as the well-publicized but ultimately misleading success of the “Beardstown Ladies”—tend to exaggerate performance. Ensure every member signs a formal agreement before starting an investment club.
Always collect a signed hold harmless agreement from any withdrawing partner to protect the partnership and remaining members. Make multiple copies of the signed agreement. Store one securely in a home safe or safe deposit box, and provide a copy to each partner.