Precedents & Forms

A. AGREEMENTS

1
PARTNERSHIP AGREEMENT: LONG FORM

[70.47]

THIS AGREEMENT is made the ________ day of ________________ 20___

BETWEEN:

(1) [XXX] of (residential address), of the first part;

AND

(2) [YYY] of (residential address), of the second part;

AND
(3) [ZZZ] of (residential address), of the third part,

collectively, the ‘Parties’ and individually ‘the Party’).1

WHEREAS:

(A) The Parties are (state brief description of the occupation or

profession of the parties).

(B) The Parties have agreed to enter into this Agreement to regulate their
relationship as partners in (name of partnership) to carry on a
general practice in (state brief description of practice/partnership).

IN CONSIDERATION of the mutual covenants herein the Parties agree as

follows:

1. DEFINITION AND INTERPRETATION

1.1 In this Agreement, unless the context otherwise expressly

provides, the following words or phrases shall have the respective
interpretations:

‘Accountants’ means (name of accounting firm) of

(address) or such other firm of public
 accountants as the Parties may from time to
time appoint;

‘Accounting means (date) in each year or such other

Date’ date as the Parties may from time to time
agree;

‘Accounting means the period of one (1) calendar year

Period’ ending on the Accounting Date or such other
period as the Parties may agree from time
to time;

‘Agreement’ means this written agreement and all the

schedules, attachments and annexures hereto;

‘Bank’ has the same meaning as specified in

clause 12.1;

‘Compulsory has the same meaning as specified in

Retirement clause 16.2(b);
Notice’
‘Continuing means the Parties remaining after one
Parties’ Party has, by reason of his death,
retirement (or deemed retirement),
expulsion or for any other reason, ceased to
be a partner in accordance with the
provisions of this Agreement;

‘Disabled has the same meaning as specified in

Party’ clause 17.1;

‘Effective has the same meaning as specified in

Date’ clause 2.2(a);

‘General has the same meaning as specified in

Expenses’ clause 11.1;

‘Managing has the meaning referred to in clause 6.3;

Partner’
‘Net Profit’ means the Partnership Profit less any
provision for the taxation (if any) for any one
or more project, work or assignment in
respect of an Accounting Period;

‘Option’ has the meaning specified in clause 19.1;

‘Outgoing means a Party who, by reason of his

Party’ death, retirement (or deemed retirement),
 expulsion or for any other reason, ceases to
be a partner in accordance with the
provisions of this Agreement and. where the
circumstances so require and the context
admits, shall be deemed to include a
reference to his personal representatives,
estate, successors in title or trustee in
bankruptcy;

‘Partnership’ means the legal relationship between the

Parties as partners created under this
Agreement;

‘Partnership means the revenues derived from or

Profit’ attributed to any one or more project,
work or assignment of the Partnership in
respect of an Accounting Period before
taxation but charging or providing for:

(a) the General

Expenses of the
Partnership and
the Practice
being such sums
as may be
determined by the
Partnership from
time to time; and
all expenses and
outgoings for
that project,
work or
assignment and
(b) Practice;

‘Practice’ means the business of the Partnership;

‘Purchaser has the same meaning as specified in

Price’ clause 20.2;

‘Retiring Party’ has the same meaning as specified in

clause 16.2;

‘Specified means, in respect of the Parties, the

Proportion’ proportion of their shares or interests in
 the capital or undertaking of the
Partnership as set out in the First
Schedule; and

‘Succession means a date on which an Outgoing Party

Date’ is deemed under this Agreement to cease to
be a partner whether by reason of death,
retirement (or deemed retirement),
expulsion, cessation or otherwise.

1.2 Reference to any Party shall (where the context admits) include
any reference to his personal representatives, estate,
successors in title or trustee in bankruptcy.
1.3 Reference to any statute or statutory provision includes a
reference to that statute or statutory provision as from time to
time amended, extended or re-enacted.

1.4 Words denoting the singular number only shall include the plural
and vice versa.

1.5 Words importing the masculine gender only shall include

the feminine and neuter genders and vice versa.

1.6 A period of days from the happening of an event or the

doing of any act or thing shall be deemed to be inclusive of the
day on which the event happens or the act or thing is done
and if the last day of the period is a weekly holiday or a public
holiday (‘the excluded day’), the period shall include
the next following day which is not an excluded day.

1.7 The expression ‘Ringgit’ and the abbreviation ‘RM’ shall

mean the lawful currency of Malaysia.

1.8 Unless the context otherwise requires a reference to any

clause, sub-clause, paragraph or schedule is to a clause, sub-
clause, paragraph or schedule (as the case may be) of or to this
Agreement.

1.9 The headings in this Agreement are inserted for

convenience only and shall not affect the construction
thereof.

2. FORMATION AND DURATION

2.1 Formation of Partnership

Each Party agrees to carry on the profession of (state brief

description of occupation/profession) under the name of (name
 of practice/partnership), which name must not be changed,
varied or amended except by unanimous agreement of the
Parties.2
2.2 Duration

(a) All conditions herein stated in this Agreement

are deemed to be effective as from the _________
day of _____________________ 20___ (‘the
Effective Date’).
(b) The Partnership shall continue from the Effective Date
for an unlimited duration until determined in
accordance with the conditions and provisions
hereinafter contained.3
3. LOCATION

3.1 The Practice shall be carried on at (location and address) or

at any other place determined by the Parties.

4. DUTIES AND RESPONSIBILITIES

4.1 Each Party shall at all times:

(a) show the utmost good faith to the other Parties in all
matters relating to the Partnership and shall furnish to
the other Parties when required a full account in
writing to all accounts, entries, dealings and
transactions relating to the Practice with which he is
concerned;4
(b) devote his whole time and attention to the Practice
and attend to the Practice during the usual hours
except during any holidays to which he is entitled to
and except during incapacity due to illness, injury
and/or any other reasonable cause;

(c) conduct himself in a proper and responsible manner

and use his best skill and endeavours to promote the
Practice;

(d) duly and punctually pay and discharge his separate

and private debts and liabilities whether present or
future and keep the Partnership property and the other
Parties and their respective estates and effects
indemnified against the same and against all actions,
proceedings, costs, claims and demands in respect
thereof; and

(e) fulfil the requirements of his job specifications as set out

in the Fourth Schedule.
5. RESTRICTIONS ON PARTNERS’ AUTHORITY

5.1 No Party shall without the consent of the other Parties:5

(a) engage, directly or indirectly, in any business or any
professional practice other than the Practice, or
accept any appointment or office;

(b) engage or (except for gross misconduct) dismiss any

employee of the Partnership;

(c) pledge the credit of the Partnership;6

(d) lend money or give credit on behalf of the Partnership
to or have any dealings with any person, company or
firm with whom the other Parties or Party shall have
previously decided not to deal with and any loss
incurred through any breach of this provision shall be
made good to the Partnership solely by the Party
committing the breach;

(e) buy, order or contract for any goods or property on

behalf of the Partnership and any goods or property
bought, ordered or contracted for by any Party in
breach of this provision shall be taken and paid for
solely by him and shall be his separate property
unless the other Parties shall elect to adopt the
transaction on behalf of the Partnership;

(f) give any guarantee on behalf of the Partnership;

(g) enter into any bond or become bailor or surety for any
person or do or knowingly cause or permit or suffer to
be done anything whereby the property of the
Partnership may be seized, attached, taken in
execution or otherwise endangered;

(h) transfer, assign, dispose, charge or otherwise

incumber his share or interest in the Partnership or
any part thereof or enter into partnership with any
other person concerning such share or interest or any
part thereof;7
(i) compromise, compound (except upon payment in full),
release or discharge any debt due to the Partnership;

(j) use the name of the Partnership or use or deal with

any Partnership property in any manner other than for
the purpose of the Partnership;8 and
 (k)
divulge to any person, or use to the detriment of or in
competition with the Partnership, any trade secret or any
other confidential information concerning the business,
investments or affairs of the Partnership or any of its
clients which may come to his knowledge while he is a
partner and which shall not have become public
knowledge.9
6. MANAGEMENT OF PARTNERSHIP

6.1 Partners’ Meetings

(a) Any Party may convene a Partnership meeting by

giving the other Parties at least [three (3)] days written
notice of the meeting (or such shorter period of notice
as determined by the Managing Partner).

(b) The quorum for a Partnership meeting is [two-

thirds (2/3)] in numbers of the Parties.

(c) The quorum must be present throughout each meeting.

(d) If a quorum is not present within [thirty (30)]

minutes from the time appointed for the meeting, the
meeting must be dissolved.

6.2 Decisions

Subject to clause 6.3, all decisions and resolutions of the

Partnership must be made by unanimous agreement of the
Parties in attendance passed at a Partnership meeting where a
quorum is present.

[(Where there is one partner holding majority interest in the

partnership, the following clause may be included.)
Notwithstanding the above, for so long as XXX remains a Party,
no resolution may be passed without XXX voting in favour of, or
signing, the resolution.]

6.3 Managing Partner

(a) [Subject to clause 6.3(ai)], the Parties must elect one of

their number to be Managing Partner for such
period and on such terms as they think fit.

[(Where there is one partner holding majority interest in the

partnership, the following clause may be included.)
 (ai) While XXX remains a Partner, he must be the
Managing Partner.]

(b) The Managing Partner has the following powers:

(i ) det erm i ni ng t he basi c pol i ci es of

t he Partnership and the manner of
implementing those policies;

(ii) determining the business plans and

budgets for each financial period;

(iii) approving the annual accounts for

submission to the Parties;

(iv) directing the development and the day-to-

day running of the business of the Partnership;

(v) setting the objectives of the Partnership;

(vi) reviewing the progress and results of the

Partnership;

(vii) determining staff requirements; and

(viii) determining office procedures

(including holiday entitlements and
expense entitlements) and rules of conduct
applicable to employees.

(c) The Managing Partner may delegate any of his

powers to a committee or committees consisting of one
or more persons. A committee to which any
powers have been delegated must exercise the
powers delegated in accordance with the Managing
Partner’s directions.

7. HOLIDAYS AND ABSENCES

7.1 Each Party, save as hereinafter provided, shall be entitled to

(number) days’ leave in each calendar year. In computing
(number) days, public holidays and Sundays shall not be
included.

7.2 Leave may be accumulated but not more than (number)

months’ leave may be taken in any calendar year, without the
consent of all the Parties.
 7.3 A Party shall also be entitled to take leave of absence for a
period considerably longer than the periods mentioned
above with the consent of the other Parties PROVIDED
THAT he shall not be entitled to his monthly drawings
under clause 10.1 throughout the period of leave of
absence, but will be entitled to his share of the Net Profits
accruing on the Accounting Date (if any).

8. PARTNERSHIP PROPERTY/PROFITS AND LOSSES

8.1 Save for the distribution of the Net Profits between the Parties as
provided in clause 8.2, all the furniture, safes, boxes,
professional equipment and office and other equipment and
fixtures and fittings in or about the Partnership premises
hereinbefore referred to and used for the purposes of the
Practice shall be the assets of the Partnership and shall belong
to the Parties in their Specified Proportion.10
8.2 Upon the settlement of the annual accounts in accordance
with clause 14, the Net Profits shall be dealt with in the manner
set out in the Third Schedule.11
8.3 All liabilities and losses of or damages and claims against the
Partnership properly incurred or suffered shall likewise be
borne by or between the Parties in accordance with their
Specified Proportion.

9. CAPITAL, LOANS AND ADVANCES TO THE PARTNERSHIP

9.1 Capital

(a) The capital of the Partnership as at the Effective Date

shall be the sum of Ringgit Malaysia (state amount in
words) (RM ___), which shall be contributed by the
Parties in accordance with the Specified Proportions.

(b) If any further capital shall at any time be considered by

the Parties to be necessary or expedient for the
efficient carrying on of the Practice the capital that shall
be contributed by the Parties will be in accordance with
the Specified Proportions PROVIDED THAT no Party
shall be required to contribute more than the sum of
Ringgit Malaysia (state amount in words) (RM ___) in
any one calendar year.

9.2 Loans and Advances to the Partnership

(a) If any Party shall, with the consent in writing of all the
other Parties, advance any sum of money to the
Partnership over and above his due contribution to
 capital, the same shall be a debt due from the
Partnership to such Party and shall carry interest at a per
annum rate equivalent to that rate which is the Kuala
Lumpur Interbank Offered Rates (KLIBOR) applicable
on the day of the advance for the relevant period of the
advance as publicly announced or published in a
Malaysian daily newspaper on the following day of
the advance. In the absence of any agreement to the
contrary, the said interest shall be payable yearly on the
Accounting Date during the continuance of the advance
prior to any distribution of profits to any of the Parties.12
(b) No sum advanced shall be deemed an increase of the
capital of the Party advancing the same or to entitle him
to any increased share in the profits of the Partnership.

(c) Every or any such sum advanced together with the

interest for the time being due shall be repaid by the
Partnership to such Party on the giving of three (3)
months’ notice in writing either by the Party or
the Partnership in respect thereof.

10. DRAWINGS

10.1 Each of the Parties may draw out of the Partnership bank account
a monthly sum not exceeding the sum set out in the Second
Schedule in any one Accounting Period on account of his
share of the Net Profits. Where the aggregated monthly
drawings of any Party in any one Accounting Period is in
excess of his share of the Net Profits (as determined or
provided in accordance with clause 8.2) for that
Accounting Period, then any such excess shall be refunded
together with interest thereon at the per annum rate equivalent
to the [1 month] KLIBOR rate applicable on the last day of
the Accounting Period as publicly announced or published
in a Malaysian daily newspaper on the following day of
the last day of the Accounting Period. Conversely, where the
aggregate monthly drawings of any Party in any one
Accounting Period is less than his share of the Net
Profits (as determined or provided in accordance with clause
8.2) for the Accounting Period, then any such shortfall shall be
paid together with interest thereon at the per annum rate
equivalent to the [1 month] KLIBOR rate applicable on the last
day of the Accounting Period as publicly announced or
published in a Malaysian daily newspaper on the following day
of the last day of the Accounting Period.

10.2 If any Party shall be unable to carry out his duties owing to
illness or to any other disability for a continuous period of
 more than three (3) months in any one calendar year, his
monthly drawings shall be paid, withdrawn or restricted as
follows.

Continuous Disability Period Amount of Drawings

(a) from the third (3rd) to half of his monthly

the sixth (6th) month drawings
(b) from the sixth (6th) nil
month onwards

11. PAYMENTS, EXPENSES AND REIMBURSEMENTS

11.1 The Parties shall pay out of the receipts of the Partnership in each
month the following general expenses (‘the General
Expenses’) of the Partnership and the Practice which shall
include, without limitation:

(a) the rents and/or taxes of any premises occupied by the

Partnership used for the purpose of the Practice;

(b) all expenses of maintenance, repairs and insurance

relating to the Practice;

(c) all expenses of providing articles and effects required for

the Practice and forming part of the capital of the
Partnership;

(d) all salaries and expenses of employees, assistants and

servants including insurance in respect thereof
connected with the Practice;

(e) any contributions, payments or amounts due to or

payable to the (name of professional organisation or
body governing the occupation/profession) for the
renewal of registration, licences or on any matter
provided for or required by (name of relevant statute
governing the occupation/profession) or any regulation
or legislation applicable to the Partnership and/or the
Practice;

(f) the reimbursements made by the Partnership for the

expenses incurred by the Parties in accordance with
clause 11.2; and

(g) all other expenses and outgoings direct or incidental

which relate to the Partnership and Practice generally.
 11.2 Each Party shall be entitled to be reimbursed monthly from the
Partnership bank account for the costs and expenses incurred
by it in respect of one motor vehicle nominated by the Parties to
be used for the purpose of the Partnership or the Practice. Such
costs and expenses shall include the costs and expenses
incurred for fuel, maintenance, repairs, registration and
insurance.13
12. BANK ACCOUNTS/BANKING ARRANGEMENTS

12.1 The bankers of the Partnership shall be (name of bank or

financial institution) or such other bank or bankers as the
Parties may from time to time unanimously agree and
appoint (‘the Bank’).

12.2 A Partnership account will be maintained with the Bank into

which all Partnership monies and securities for monies
shall as and when received be paid into or deposited.

12.3 A separate Trust Account with the Bank shall be operated in

the name of TRUST ACCOUNT (name of partnership) for
the deposit and withdrawal of clients’ monies or any
monies that the Partnership holds as trustee or as
constructive trustee.14
12.4 All cheques on both the accounts hereinbefore mentioned
shall be drawn in the name of the Partnership and can only be
drawn in the following manner:

(a) cheques amounting to Ringgit Malaysia (state amount in

words) (RM ___) and below may be signed by any one
Party; and

(b) cheques exceeding Ringgit Malaysia (state amount in

words) (RM ___) shall be signed by any two Parties.15

13. BOOKS OF ACCOUNTS

13.1 Proper books of accounts shall be kept wherein it shall be posted

the particulars of all monies, goods or effects belonging
to or owing to the Partnership or paid, received, sold or
purchased in the course of the Partnership or the Practice
and of all such other transactions, matters and things
relating to the Partnership or the Practice as are usually
entered in books of account kept by persons engaged in a
business of a like character.

13.2 Such books together with all invoices, correspondence and other
documents relating to or concerning the Partnership or the
Practice (except such as are to be kept with the Bank) shall
 always remain and be kept in some convenient part of the
premises of the Partnership or such other place as may be
determined by the Parties where each of them shall and may
have free access to the same.16
14. ACCOUNTS

14.1 Annual Accounts

(a) As soon as practicable after the Accounting Date during

the continuance of the Partnership, a general account
shall be taken and made up to the Accounting Date on
the assets, cash balance, stock of materials on hand,
credits, effects, debts, accrued fees and liabilities
of the Partnership and of all matters and things
usually comprehended in a general account of the
like nature.

(b) In taking such account a proper allowance and

deduction shall be made for and in respect of bad or
doubtful debts owing to the Partnership.

(c) Every such account and valuation shall be balanced,

agreed to and signed by each of the Parties.

(d) After the signatures, each of the Parties shall be

bound by such account save and except as to any
manifest and/or error detected which is highlighted
and brought to the attention by any Party to the other
Parties within three (3) months after the same shall
have been signed.

(e) Every such error so detected as aforesaid shall be

forthwith rectified.

14.2 Termination Accounts

In preparing the accounts for termination of the
Partnership, the Accountants shall value all work in progress at
the Succession Date after making allowance for bad or
doubtful debts of the Practice.

15. INSURANCE

15.1 All buildings, machinery, office equipment and other assets for
the time being of the Partnership of an insurable nature shall at
the cost of the Partnership be kept insured to the full value
thereof with reputable insurers approved by the Parties.
 15.2 All monies received from such insurance in the event of
loss or damage to any property so insured shall as far as
possible be applied in making good such loss or damage or
otherwise distributed to the Parties in accordance with their
respective Specified Proportions.

15.3 The Partnership shall maintain policies to insurance of

such respective amounts as the Parties may from time to time
agree including, but not limited to, the following:

(a) sickness and accident;

(b) employers’ liability;

(c) public liability;

(d) loss of profits or income consequent upon destruction

of or damage to the Partnership premises by fire or
loss of profits or income consequent upon the death,
illness or incapacity of any one of the Parties as a
partner; and

(e) professional indemnity insurance.

16. RETIREMENT

16.1 A Party intending to retire shall give to the other Parties not less
than ___ months’ notice in writing of his retirement and he shall
retire from the Partnership on the expiry of the notice.

16.2 A Party (‘the Retiring Party’) shall be deemed to retire from the
Partnership:

(a) at the end of the year in which the Retiring Party

attains the age of (state age) or at such later date as
the other Parties may agree in writing;

(b) on the expiry of not less than (state period) months

from the day the other Parties serve upon the Retiring
Party a Compulsory Retirement Notice UNLESS
before the expiry of such notice the Retiring Party
resumes his duties to the satisfaction of the other
Parties and satisfies them that he is willing and
able to carry out the duties properly in future;

and for the purposes of this Agreement, ‘Compulsory

Retirement Notice’ is a written notice given by the
other Parties to the Retiring Party requiring the
 Retiring Party to retire and such notice is given at a time
where by reason of illness, injury or other cause the
Retiring Party is unable to perform his duties properly
as a partner and has been unable to do so throughout a
continuous period of (state period) months
immediately preceding the service of the Compulsory
Retirement Notice or for more than an aggregate of
(state period) months immediately preceding such
service;

(c) on the service of a notice in writing upon the Retiring

Party given by the other Parties requiring the Retiring
Party to retire at any time after the Retiring Party has
become or deemed to have become mentally ill or
mentally incapable or become a mental patient under
the applicable or relevant legislation governing mental
illness or incapacity.

17. EXPULSION

17.1 If any Party (‘the Disabled Party’):

(a) shall commit any breach of a material term or

condition of this Agreement or shall commit persistent
breaches of this Agreement;
(b) becomes bankrupt 17 or insolvent or compounds or
makes any arrangement with his creditors;

(c) shall suffer his share or interest in the Partnership to

be charged for his separate debt or without the
consent of the other Parties shall transfer, assign,
dispose, charge or otherwise incumber such share or
interest or any part thereof;

(d) shall fail to pay any moneys owing by him to

the Partnership within [thirty (30)] days of being
requested in writing to do so by the other Parties;

(e) shall be guilty of habitual insobriety or such behaviour

likely to prejudice the Partnership or the Practice or of
any persistent breaches of the rules of ethics or
etiquette of (name of relevant statute or code
of practice governing the
occupation/profession) or of the Practice itself; or

(f) shall be absent from the Practice without proper cause

and without the consent of the other Parties for more
 than (state period) days in any period of [twelve (12)]
months,

then, the other Parties shall be entitled by notice in writing

given to the Disabled Party to expel the Disabled Party from the
Partnership and the Disabled Party will be deemed expelled
from the Partnership on the expiry of [thirty (30) days] after the
service of the notice.18
18. CESSATION

18.1 If any Party’s name is erased from the register of those

professionally entitled to practise (state
occupation/profession) or is in any manner legally
prevented or prohibited from practising as a (state
occupation/ profession), he shall thereupon automatically
cease to be a partner or party to this Agreement.

19. OPTION

19.1 Upon the death or retirement (or deemed retirement) of a

Party or the expulsion or cessation of any Party as a
partner, the Continuing Parties shall have the option to
acquire the Outgoing Party’s Specified Proportion of the
Partnership capital or undertaking (‘the Option’). The
Option shall be exercisable only by notice given:

(a) if the Outgoing Party shall have died, within [one (1)]
month of his death;

(b) if the Outgoing Party shall be retiring or deemed to be

retiring pursuant to clause 16, at least [one (1)]
month[s] before the retirement or deemed retirement is
due to take effect;

(c) if the Outgoing Party shall have been expelled by

notice given pursuant to clause 17, in the notice
expelling him;

(d) if the Outgoing Party shall have ceased to be a partner

pursuant to the provisions of clause 18, within one (1)
month of the Continuing Parties becoming aware of
the event which caused such cessation.

19.2 If the Continuing Parties shall give notice as aforesaid exercising

the Option the provisions of clause 20 shall apply.
 19.3 If the Continuing Parties shall not give such notice or fails to
give such notice or does not exercise the Option, the
Partnership shall be dissolved on the Succession Date and on
such dissolution the affairs of the Partnership shall be wound
up without prejudice to any existing liability of the Parties,
the Partnership or the Practice.

20. OUTGOING PARTY/OPTION PRICE ETC

20.1 The provisions of this clause shall apply if on the death or

retirement (or deemed retirement) of a Party or expulsion or
cessation of a Party as a partner the Continuing Parties execute
or exercise the Option in accordance with clause 19.
Upon the exercise or execution of the Option, the Continuing
Parties must acquire and the Outgoing Party must sell the
Outgoing Party’s Specified Proportion of the Partnership
capital or undertaking for the Purchase Price determined in
accordance with clause 20.2 herein and otherwise subject to
the terms and conditions herein.19
20.2 The purchase price for the Outgoing Party’s Specified
Proportion of the Partnership capital or undertaking (‘the
Purchase Price’) shall be determined by:

(a) firstly, aggregating the following:

(i) the amount of capital contributed by the

Outgoing Party;

(ii) his share (which is in accordance with the

Outgoing Party’s Specified Proportion)
of the value in any property, assets and
interests acquired by the Partnership prior
to the Succession Date to be arrived at by
agreement amongst the Outgoing Party
and the Continuing Parties, where
possible, or in default of such agreement
to be assessed by a valuer to be
nominated by the Outgoing Party and the
Continuing Parties or failing such agreement
by the Accountants;

and the expenses of any professional valuation

shall be borne by the Outgoing Party and
the Continuing Parties in the same
proportion as their Specified Proportions
immediately prior to the Succession Date;
 (iii) his share (which is in accordance with the
Specified Proportion) in billed but
uncollected fees as at the Succession Date
but in respect of work already carried out by
the Partnership less (state percentage)% of the
amount to account for possible bad debts;

(iv) an amount equal to (state proportion) of the

Net Profits which the Outgoing Party had
received for (state period) years prior to the
Succession Date and if the Outgoing Party
has been a partner for a period of less than
(state period) years (state percentage)% of
the Net Profits appearing in the latest
financial statements or accounts of the
Partnership or Practice prior to the death,
retirement (or deemed retirement),
expulsion or cessation of the Outgoing Party
as a partner;

(v) his share (which is in accordance with the

Outgoing Party’s Specified Proportion)
of the profits in respect of work-in-progress
which is to be valued by the Accountants as at
the Succession Date after taking into account
any bad or doubtful debts as provided under
clause 14.1(b); and;

(b) then deducting any sums due or owing by the Outgoing

Party to the Partnership or the Practice under this
Agreement.

20.3 The Purchase Price shall be paid to the Outgoing Party by the
Continuing Parties within [six (6)] months of the Succession
Date.20
20.4 The Outgoing Party’s Specified Proportion of the Partnership capital
or undertaking shall vest in the Continuing Parties in proportion
to the interest held by them with effect from [the Succession
Date] or [the date the Continuing Parties fully pay the Purchase
Price in accordance with this Agreement].

20.5 In addition to the Purchase Price, any undrawn balance of the

Outgoing Party’s share of the Net Profits as at the Succession
Date and any sum due to him in respect of any leave accrued and
not taken shall be paid to him or his estate as soon as the
amount thereof has been ascertained PROVIDED THAT:
 (a) unless the Succession Date occurs at the end of the
Accounting Period such share shall be deemed to be a
proportionate part calculated on a time basis of the
share of the Net Profits of the Partnership for that
Accounting Period to which the Outgoing Party would
have been entitled if he had continued to be a partner
for the whole of that Accounting Period; and

(b) the Continuing Parties may retain from such undrawn

balance such sum as the Accountants shall estimate
to be the amount of any income tax or any other tax
which may be payable by the Partnership and which is
attributable to the Outgoing Party’s share of the profits
of the Partnership or other receipts from the
Partnership but the Continuing Parties shall account to
the Outgoing Party for any amount remaining owing
after payment of the income tax or any other tax so
attributable. Where the Outgoing Party’s share of the
Net Profits is insufficient to settle any income tax
or any other tax which may be payable by the
Partnership and which is attributable to the Outgoing
Party’s share of the profits of the Partnership or other
receipts from the Partnership, the Continuing Parties are
entitled to retain from the Purchase Price such
amounts which are required to settle the same. After the
settlement of the same, the Continuing Parties shall
likewise account to the Outgoing Party for any
amount remaining after settlement.

20.6 The Continuing Parties shall pay and discharge all debts and
liabilities of the Partnership from the proceeds of the
Partnership incurred up to the Succession Date except:

(a) any debt or liability in respect of income tax or any

other tax attributable to the Outgoing Party’s share of
the profits of the Partnership or other receipts from the
Partnership; and

(b) any debt or liability in respect of any claim arising

from any wrongful act or omission of the Continuing
Parties or any of them to the extent that such
claim is not covered by insurance.

20.7 If the Outgoing Party shall have ceased to be a partner

otherwise than by reason of death, due notice of the fact that the
Outgoing Party has ceased to be a partner shall be given by the
 Continuing Parties in the New Straits Times and one other daily
English newspaper.21
20.8 The Outgoing Party shall deliver to the Continuing Parties all
books of account, records, correspondence and other
documents in his possession relating to the Practice but
during the period prior to the payment of the Purchase
Price the Outgoing Party or his duly authorised agent shall be
permitted to inspect by appointment the books of
account, records, correspondence and other documents of the
Partnership business so far as they relate to any period
preceding the Succession Date.

20.9 The Outgoing Party shall sign, execute and do all such
documents, deeds, acts and things as the Continuing
Parties may reasonably request for the purpose of enabling the
Continuing Parties to recover and get in the outstanding assets or
property of the Partnership or for the purpose of appointing a
new trustee of any Partnership property or for the purpose
of conveying, assigning or transferring to the Continuing
Parties any of the Partnership property which immediately prior
to the Succession Date is vested in the Outgoing Party as one of
the partners vested in trust for the Partnership PROVIDED
THAT the Continuing Parties shall not without the prior consent
of the Outgoing Party dissipate, divest or transfer such assets or
property prior to the full payment of the Purchase Price.

20.10 If during the period in which a share of the profits is being paid
to the Outgoing Party, the Practice ceases to be carried
on by the Continuing Parties by reason of force majeure, then
all obligations to the Outgoing Party shall cease forthwith
and all available assets shall be shared in such a manner
as to take into account the interests of the Outgoing
Party as well as those of the Continuing Parties.

20.11 In clause 20.10, ‘force majeure’ means any event or

circumstances (whether arising from natural causes, human
agency or otherwise) beyond the control of the Continuing
Parties including, without limitation, (insofar as such is beyond
the control of the Continuing Parties) riot, civil commotion,
or war.

21. CONFIDENTIALITY/NON-COMPETITION RESTRICTIONS

Each Party hereby agrees with the other Parties as follows:

21.1 not at any time during the term of this Agreement or thereafter to
communicate or divulge any matters relating to the Partnership
and the Practice or relating to any client or agent of the Parties
 which may become known to that Party howsoever save in so far
as:

(a) such disclosure shall be necessary in the interests of all

the Parties;

(b) such disclosure is in respect of information which is or

becomes available to the public by publication or
otherwise through no fault of that Party; or

(c) such disclosure is required by law or any court of

competent jurisdiction;

21.2 not during the term of this Agreement to be engaged,

concerned or interested in any business or undertaking
whatsoever other than in connection with the Partnership and the
Practice and the holding of shares or securities quoted on a
public stock exchange as permitted in this Agreement; and

21.3 not during the term of this Agreement or for [two (2) years]
thereafter to solicit or entice away either on his own
account or for any other person, company or firm any
person who shall have been a client of the Partnership during
the continuance of the Partnership and during the period of
[two (2) years] prior to the dissolution of the Partnership.22
22. DISSOLUTION

22.1 The Partnership may be dissolved by not less than [three quarters
(3/4)] of the Parties at any time giving at least [three (3)]
months’ notice in writing to the other Party or Parties of
their intent and upon the expiry of such notice the dissolution
shall take effect.23
22.2 Upon the expiry of a notice under clause 22.1 or if the
Partnership shall otherwise be dissolved the winding-up of the
business and undertaking of the Partnership shall be
administered in accordance with the Partnership Act 1961.24
23. NOTICE

23.1 Any notice hereunder shall be sufficiently given to or

served on the person to whom it is addressed if it was sent in a
prepaid letter by registered post addressed to that person at his or
her last known address.

24. ADMISSION OF NEW PARTNERS

24.1 The Parties may at any time unanimously agree to increase

the number of partners within the Partnership.25
 24.2 If a new party is admitted to the Partnership, that event
shall be evidenced by an agreement supplementary to this
Agreement executed by such new party and by all the
Parties so that the terms of the agreement shall after such change
continue to govern the Partnership notwithstanding such
change. The supplemental agreement shall be substantially in
the form set out in the Fifth Schedule.

24.3 The capital to be contributed by the new party will be an

amount unanimously agreed by all the Parties. If the
Parties are unable to reach an agreement on the amount that
is to be contributed, the Parties may appoint an
independent valuer to determine the market value of each of the
shares of the Partnership.

24.4 The independent valuer appointed must be the current

President of the Malaysian Institute of Certified Public
Accountants or any nominee lawfully appointed by that
President.

25. INDEMNITY

25.1 Each Party shall at all times duly and punctually pay and
discharge his separate and private debts and engagements
whether present or future and keep the Partnership
property and the other Parties and their respective estates
indemnified therefrom and from all actions, proceedings,
costs, claims and demands in respect thereof.

25.2 Any Party who commits a breach of any of the provisions in this
Agreement shall indemnify and keep the other Parties
indemnified from and against all losses, damages, actions,
proceedings, costs and expenses arising directly or indirectly
out of such breach to the extent that such breach is not covered
by any insurance policy.

25.3 Without prejudice to the generality of clause 25.2, should the

loss suffered by the Partnership by reason of a Party committing
a breach of the provisions in this Agreement exceed the
amount covered by any insurance policy, the Party
committing such breach will indemnify and keep the other
Parties indemnified from and against all losses, damages,
actions, proceedings, costs and expenses arising directly or
indirectly from such breach.

26. ARBITRATION

26.1 Arbitration
 If any dispute between the Parties shall arise out of or in
connection with this Agreement, the Parties shall use their best
endeavours to resolve the dispute amicably. If such dispute
remains unresolved for [ninety (90)] days, the dispute in
question shall be referred and finally resolved by arbitration in
Kuala Lumpur in accordance with the [Rules of the Kuala
Lumpur Regional Centre for Arbitration] for the time being
in force, which rules are deemed to be incorporated by
reference into this clause.

26.2 Arbitrator

Unless otherwise agreed, the tribunal shall consist of one

arbitrator to be appointed by mutual agreement in writing
between the Parties to the dispute. If such Parties fail to reach
agreement within [twenty-one (21)] days or in the event of
the death of the arbitrator or his unwillingness or inability to
act, the arbitrator shall be appointed by the Director of the
Kuala Lumpur Regional Centre for Arbitration.

26.3 Applicability

Nothing herein contained in this clause shall preclude any Party

from bringing an action in any court of competent jurisdiction for
injunctive relief in relation to the breach or threatened breach of
any of the terms hereof by any other Parties.

27. SEVERABILITY

27.1 If one or more of the provisions shall be invalid, illegal or

unenforceable in any respect under any applicable law or
decision, the validity, legality or enforceability of the
remaining provisions contained herein shall not be affected or
impaired in any way.

27.2 Each party shall, in any such event, execute such additional
documents as the other Parties may reasonably request in order
to give valid, legal and enforceable effect to any provision
which is determined to be invalid, illegal or unenforceable.

27.3 If any provision shall be void, illegal or unenforceable but

would be valid and enforceable if read down, then that
provision shall be read down to the extent necessary to
render the provision valid and enforceable.

28. MISCELLANEOUS
 28.1 None of the Parties shall assign or transfer any of its rights
hereunder, or any part thereof to any party.

28.2 This Agreement shall be binding upon each party’s successors

and assigns.

28.3 This Agreement shall be governed by and construed in

accordance with the laws in force from time to time in
Malaysia and the Parties agree to submit to the jurisdiction of the
courts of Malaysia.

28.4 The failure of any party hereto at any time to seek

enforcement, observance or performance by the other
Parties of any of the provisions of this Agreement shall in no
way affect the first mentioned party’s right to enforce such
observance or performance at any time thereafter nor shall the
waiver by any party hereto of a breach of any provision hereof be
taken or held to be a waiver of any succeeding breach of such
provision.

28.5 This Agreement may be executed in any number of

counterparts and all such counterparts when taken together shall
constitute one and the same instrument.

28.6 This Agreement shall constitute the entire agreement

between the Parties in relation to the subject matter hereof, and
supersedes all period communications, understandings and
agreements relating thereto except as otherwise expressed
herein.

IN WITNESS WHEREOF the parties hereto have hereunto set their hands the day
and year first above written.

Signed by [XXX] in the presence of: )

)
)
)
)
)
Signed by [YYY] in the presence of: )
)
)
)
)
)
Signed by [ZZZ] in the presence of: )
)
)
)
)
)
 FIRST SCHEDULE

(Clause 8)

(Specified proportions of the parties)

Parties %

[XXX]

[YYY]

[ZZZ]

(remainder of page intentionally left blank)

 SECOND SCHEDULE

(Clause 10.1)

(Monthly drawings)

Parties Monthly Amount

(RM)

[XXX]

[YYY]

[ZZZ]

(remainder of page intentionally left blank)

 THIRD SCHEDULE

(Clause 8.2)

(The parties’ share of the net profits derived from or attributable to any specific
project, work or assignment of the Partnership or the Practice)

Percentage of the Net Profit

(A) Firstly, the Party responsible for
securing the project,
work or assignment is entitled to

_____%

(B) Secondly, [AAA] who is the

Managing Partner is entitled
to _____%
(C) Thirdly, the Party responsible
for co-ordinating and attending
to the project, work or
assignment from the beginning
to the end is entitled to

_____%

(D) Fourthly, each of the Party

(on a pro rata basis in
accordance with the Specified
Proportion)
_____%

(E) Allocation for the purposes

of reserves in the Partnership,
shall be
_____%

Total 100%

(remainder of page intentionally left blank)

 FOURTH SCHEDULE

(Clause 4.1(e))

(Job specification)

Parties Job Specification

[XXX] ________

[YYY] ________

[ZZZ] ________

(remainder of page intentionally left blank)

 FIFTH SCHEDULE

(Clause 24.2)

Supplemental Agreement

THIS AGREEMENT is made ________ day of ________________ 20___

BETWEEN:

(the names of the parties) (‘the Existing Partners’) of the first part

AND

(the name of the new party) (‘the New Partner’) of the second part.

WHEREAS:

(A) That the New Partner by this agreement, agrees to be admitted and the
Existing Partners agree to admit the New Partner as a partner in the
Partnership.

(B) That the New Partner agrees to be bound by the Partnership

Agreement (as defined hereunder).

(C) That the terms and conditions as stated in the Partnership Agreement
form part of this agreement.

IT IS AGREED as follows:

1. Unless the context otherwise requires and unless otherwise expressly

provided, the terms used herein shall have the same meaning as the
terms used in the Partnership Agreement.

2. This agreement is supplemental to the Partnership Agreement dated the

____________ day of _______________________________ 20___
made between the Existing Partners on the terms of which the
Existing Partners since the date thereof carried on and are now carrying
on a general practice in (state brief description of practice/partnership) at
(address) (‘the Partnership Agreement’).

3. As from the date of this agreement, the New Partner shall be a

partner in the Partnership with the Existing Partners for the unexpired
residue of the term created by and subject in all respects to the
conditions, stipulations and provisions of the Partnership Agreement
except insofar as the same are varied by this agreement.
4. The New Partner will bring in capital to contribute to the Partnership
amounting to Ringgit Malaysia (state amount in words) (RM ___) by
way of additional capital and having paid Ringgit Malaysia (state
amount in words) (RM ___) as part payment of such capital to the
Partnership on the date of this agreement agrees to pay Ringgit
Malaysia (state amount in words) (RM ___) of such additional capital by
(number) equal monthly instalments, such instalments to be paid by the
_________ day of _______________________________ 20___ of every
month commencing from the ____________ day of
____________________________ 20___ .

5. The Net Profits of the Partnership as from the date of this agreement
shall belong to and be borne by the Existing Partners and the New
Partner as follows:

(state details)

6. The losses (if any) of the Partnership as from the date of this
agreement (including losses of a capital nature) shall be borne by the
Existing Partners and the New Partner as follows:

(state details)

7. The New Partner shall be entitled to draw out of the firm’s bank
account in each month a sum not exceeding RM (state amount).

8. The New Partner will be given a job specification as follows:

(state details)

9. Subject to the variation set out in this agreement, the Partnership

Agreement remains in full force and effect and the Partnership
Agreement shall be read and construed and be enforceable as if the said
variation had been constituted or had formed part of the
Partnership Agreement.

10. Each of the parties agrees that he will on the request of all or any of the
other parties execute and do all such deeds, documents and things as
may be necessary to carry this agreement into effect.

11. This Agreement will govern the relationship between the Existing
Partners and the New Partner and any prior agreement subsisting
between the Existing Partners on the one part and the New Partner on the
other part shall cease to have effect on the date of this
Agreement.
 (remainder of page intentionally left blank)

1 As to the checklist on matters to consider in the preparation of a partnership agreement,

see Checklist 1 [70.46].
2 See the Partnership Act 1961 (Act 135) s 6 ([70.3]).
3 This is a ‘partnership at will’ as no fixed term has been agreed for the duration of the
partnership. As to duration and dissolution of a partnership, see [70.26], [70.32].
4 As to the duty of partners to render true accounts and full information of all things
affecting the partnership, see [70.28].
5 If partners have agreed on the restrictions placed on their power to bind the firm, no act
done in contravention of the agreement is binding on the firm with respect to
persons having notice of the agreement: see [70.9].
6 As to partners using the credit of the firm for private purposes, see [70.8].
7 Without an express provision, the Partnership Act 1961 s  33(1) permits a partner to
assign his share in the partnership: see [70.31].
8 The Partnership Act 1961 s 31(1) provides that every partner must account to the firm
for any benefit derived by him, without the consent of the other partners, from any
transaction concerning the partnership or use of the partnership property, name or
business connection: see [70.29].
9 As to the statutory duty of a partner not to compete with the firm, see the Partnership Act
1961 s 32 ([70.30]).
10 As to partnership property, see [70.21].
11 Unless otherwise agreed by the partners, all partners are entitled to share equally in the
capital and profits/losses of the partnership them: see the Partnership Act 1961 s 26(a)
([70.24]).
12 Unless otherwise agreed by the partners, a partner is entitled to interest at the rate of
8% per annum on any advances made to the partnership: see the Partnership Act 1961
s 26(c) ([70.24]).
13 Every partner is entitled to be indemnified for his expenses incurred in the ordinary
and proper conduct of business of the firm unless varied by the consent of all the partners:
see the Partnership Act 1961s 26(b) ([70.24]).
14 Note that this provision may only be applicable to certain professional practices,
eg the legal profession.
15 The Partnership Act 1961 s 26(e) provides that every partner may take part in the
management of partnership business. Express agreement is thus required for certain
management powers to be given to specified or a selected number of partners. See
[70.24].
16 As to the statutory right of partners to have access to partnership books, see the
Partnership Act 1961 s 26(i) ([70.24]).
17 Note that in the absence of an agreement between the partners, the partnership is
dissolved by the death or bankruptcy of any partner: see the Partnership Act 1961
s 35(1) ([70.33]).
18 Without an express agreement, no partner can be expelled from the partnership: see
the Partnership Act 1961 s 27 ([70.25]).
19 Note the rights of an outgoing partner to share profits of the partnership in certain
cases, eg where the continuing partners carry on the partnership business without
any settlement of accounts as between the firm and the outgoing partner or his estate:
see the Partnership Act 1961 s 44 ([70.42]).
20 Subject to express agreement, any amount due from continuing partners to an outgoing
partner or his estate is a debt owing as at the date of the dissolution of partnership or
death of the partner in question: see the Partnership Act 1961 s 45 ([70.43]).
21 As to the effect and sufficiency of notice of the change in the constitution of a
partnership to persons dealing with the partnership, see [70.36] and [70.37].
22 Note the Contracts Act 1950 (Act 136) s 28 exception 2, which provides that partners
may, upon or in anticipation of a dissolution of the partnership, agree that some or all of
 them will not carry on a business similar to that of the partnership within such local
limits as appear to the court as reasonable, regard being had to the nature of the business.
23 Without an express agreement, a partnership formed for an indefinite period of time can
be dissolved by a partner giving notice of his intention to do so to the other partners:
see the Partnership Act 1961 s 34(1)(c) ([70.32]). As to duration and dissolution of a
partnership, see [70.26] and [70.32]. Note also that s 37 provides that a partnership
may be dissolved on the application of a partner to the court in specified
circumstances: see [70.35].
24 On and after dissolution, the authority, rights and obligations of each partner are
limited to those necessary to wind-up the affairs of the partnership: see [70.38]. As to
the rules governing the winding-up of a partnership, see [70.39], [70.40], [70.41]
and [70.44].
25 Unless otherwise agreed between the partners, no person may be introduced as a
partner without the consent of all existing partners: see the Partnership Act 1961
s 26(g) ([70.24]).