Essay: Analysis of a Limited Liability Partnership Agreement (BHL4010)

This essay provides a detailed analysis of a Limited Liability Company Agreement between James Smith and Rachid Alami, focusing on the formation of a partnership called Raju Enterprise. The agreement outlines key terms and conditions, including the purpose of supplying seaweed from Morocco to England, the commencement and termination dates, and the business location. It details capital contributions, withdrawal procedures, and amendments, along with profit and loss allocation based on capital contributions. The essay further examines capital accounts, interest, financial reporting, audit rights, and management responsibilities. It covers meeting procedures, the admission and withdrawal of partners, dissolution processes, property sharing, and valuation methods. Voting rights, duties of loyalty, forbidden acts, indemnification, and liability clauses are also discussed. The agreement adheres to the laws of Morocco and includes definitions for capital contribution and dissociated partners. It concludes with witness signatures and dates, offering a comprehensive overview of the partnership's legal framework.

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DATED 5TH JANUARY 2020
LIMITED LIABILITY COMPANY AGREEMENT
Between
James Smith
And
Rachid Alami
Willis Law Firm

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BACKGROUND
A. James and Rachid wish to enter into a business as partners
B. Terms and conditions governing management of business are set out
in this agreement
The parties to this contract agree as follows:
Formation
I. The partners agree to enter into a Limited partnership as per the laws
of Morocco or otherwise stated in the Agreement.
Name
II. The partnership will be called: Raju Enterprise
Purpose
III. The function of the partnership will be to supply Seaweed from
Morocco to England
Term
IV. The partnership commences on 7th of July 2020 and terminate as
stated in the Agreement.
Location
V. The business location will be Casablanca and is subject to change
depending on the agreement between partners.
Capital Contribution
VI. Both partners will contribute to the capital either in cash, or property
as agreed on the value. James being the limited partner will
contribute $300,000 dollars while Rachid will Contribute $250,000
dollars.
Capital Withdrawal
VII. A written consent from all partners must be presented before
withdrawal of any capital.
Capital Amendments
VIII. Any capital amendments should not affect the interest of the partners
unless consented by all partners. Capital addition shall be contributed

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proportionately. Profits and losses will be allocated based on
individual capital contributions.
IX. Additional capital outside the Agreement is debt owed by the
partnership and not an increase in capital and must be paid with
interest without entitling any partner to voting rights or share of
profits.
Capital Accounts
X. Partners must maintain a capital account where all related amounts
will be credited as capital.
Interest
XI. Partners shall not be charged borrowing fee and loan interest will be
payable as per capital contribution.
Profit and Loss
XII. Partners shall equally share in the profits and losses of the
partnership for accounting and taxation purposes.
Yearly Reports
 The partnership shall provide a statement of income and tax returns
for all partners
 Income tax returns
Banking Systems
XIII. The partnership shall place its funds in major banking institutions
dealing in all currencies
Financial Year
XIV. The financial year ends on 31st December every year.
Audit
XV. Partners reserve the right to request for audit queries under the cost
of the partnership once every financial year.
Management
XVI. Management will be done by the general partner (Rachid)
Meetings
XVII. Partners are to hold meetings as agreed upon time, location and
reasonable terms.

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Admission of New Partner
XVIII. Existing partners must unanimously agree to admit new partners who
agree to be bound by existing agreement.
Withdrawal of a Partner
XIX. Partners reserve the right to voluntarily leave the partnership through
a written notice 3 months before withdrawal.
XX. The partnership will dissolve after withdrawal of a partner
XXI. Involuntary withdrawal may include or otherwise agreed; death,
insanity, disability to perform, breach of fiduciary duties, criminal
liability, law enforcement, or expulsion of a partner.
Dissolution and Dissociation of a partner
XXII. Dissolution requires anonymous consent
XXIII. Partnership dissolves after dissociation of a partner and remaining
partner has the right to seek damages from dissociated partner
Sharing of Property
XXIV. Partners share equally in remaining assets and liabilities after
dissolution
XXV. Creditors must be paid in the event of dissolution
XXVI. All debts must be paid first
XXVII. Partners are paid last
Interest Valuation
XXVIII. Written agreement shall prevail or otherwise market value appraisal
shall apply during valuation of partnership. The process shall be
guided by the General Accepted Accounting Principles (ACCA)
XXIX. No allowance on goodwill, patents, trade names or any other form of
intellectual property.
Voting
XXX. The General partner carries more rights than limited partner unless
otherwise stated in the agreement.
Duty of Loyalty
XXXI. All partners except limited partners shall not engage in business that
directly competes with the partnership to avid conflicts of interest to
the partnership. Limited partners must obtain consent from the rest of
the partners.

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Forbidden Acts
XXXII. No actions outside the agreement shall be allowed
XXXIII. Sharing information to third parties intentionally or unintentionally is
prohibited
XXXIV. No confession of any judgement against the partnership
XXXV. Violation of a forbidden act is taken as involuntary withdrawal
Indemnification
XXXVI. All claims shall be indemnified by the partnership and must arise from
partner’s participation in activities of the partnership
Liability
XXXVII. A partner shall not be liable to the partnership or fellow partner due
to mistakes or errors of judgment for acts of omission.
XXXVIII. The partnership shall acquire insurance for all partners, employees
and any other person working with the partnership
XXXIX. The partnership has the right to life insurance on the lives of all
partners as a policy
Amendments
XL. The agreement shall not be amended without a written consent from
all partners
Jurisdiction
XLI. The agreement is in accordance with the laws of Morocco
Definitions
a) Capital contribution is the amount contributed by a partner in cash or
property
b) Dissociated partner is a partner who is voluntarily or involuntarily
removed from the partnership under the partnership agreement
All Parties IN WITNESS OF sign the agreement on the 5th of January 2020
1st WITNESS…………………………… PARTNER 1…………………
2ND WITNESS……………………………... PARTNER 2 ………………...

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