UncategorizedWhat Is a Partnership Agreement? (Plus How to Write One with a Template)

Starting a business with someone can be an exciting venture—but it also comes with risks. In the Philippines, where many businesses are launched with friends or family, it’s especially important to put everything in writing to avoid misunderstandings later. That’s where a partnership agreement (also called Articles of Partnership) comes in.

We’ll explain what a partnership agreement is, why you need one, what to include, and how to make one. Plus, we’ve included a simple template.

What Is a Partnership Agreement?

A partnership agreement is a written contract between two or more people who agree to run a business together. It outlines each partner’s contributions, responsibilities, rights, and share in profits or losses.

In the Philippines, partnerships are governed by the Civil Code of the Philippines (Articles 1767–1867). While verbal agreements are legally valid, they can lead to misunderstandings or legal complications. A written agreement protects everyone involved and helps avoid disputes. Also, an Articles of Partnership (a form of partnership agreement) is required for business registration with the Securities and Exchange Commission (SEC) and formally operating in the country.

Why Do You Need One?

Even if you’re starting a business with a close friend or relative, you still need a formal partnership agreement. Here’s why:

• Prevents misunderstandings – Clearly defines roles, expectations, and profit-sharing terms.
• Protects your investment – Outlines what each partner is bringing into the business.
• Simplifies decision-making – Establishes how decisions are made and who has the final say.
• Sets rules for withdrawal or death – Helps you avoid complications if a partner wants to leave or passes away.
• Supports legal compliance – Some banks, clients, and government agencies may require a written agreement.

In fact, if your capital exceeds ₱3,000, the partnership must be registered with the Securities and Exchange Commission (SEC).

What Should Be Included in a Partnership Agreement?

Your partnership agreement in the Philippines should include the following:

1. Business name and address – Indicate the official name (must be registered with DTI or SEC) and business location.
2. Purpose of the business – What products or services will you offer?
3. Capital contributions – State how much each partner is contributing in cash, property, or services.
4. Profit and loss sharing – How will income and expenses be divided?
5. Roles and responsibilities – What is each partner in charge of?
6. Banking and accounting – Who will handle the finances and where will the business account be held?
7. Decision-making authority – Who can enter contracts or make financial decisions?
8. Dispute resolution – Include a process for settling disagreements (e.g., mediation or arbitration).
9. Exit terms – What happens if a partner withdraws, becomes incapacitated, or dies?

1. Dissolution clause – Outlines how the partnership can legally end.

How to Write a Partnership Agreement in the Philippines

Follow these steps:

1. Draft the agreement – Use the outline above and tailor it to your specific business setup.
2. Consult a Business Registration Service– This is recommended to properly meet registration requirements and help partners understand and support the partnership agreement.
3. Sign and notarize – All partners must sign the document in the presence of a notary public.
4. Register with the SEC – If your partnership’s capital is over ₱3,000, you’re required to register it and submit the agreement.

Sample Partnership Agreement Template 

You don’t need to search for templates online anymore. When you register your partnership business through the SEC’s eSPARC Portal, you’ll receive an official template with your inputted details.

Make sure to prepare the following information carefully before starting your online application (see our simplified sample template below). Remember that this is just a basic template to help you understand the requirements and not the official template provided when you register online.

Articles of Partnership

This Agreement is entered into on [Date] in [City], Philippines, by and between:

[Partner 1 Name], of legal age, Filipino, and a resident of [Address], and
[Partner 2 Name], of legal age, Filipino, and a resident of [Address].

Collectively referred to as the “Partners”.

1. Business Name & Purpose
   The partners hereby form a partnership under the name [Business Name], to engage in the business of [Nature of Business].
2. Principal Office
   The principal office of the business will be at [Full Business Address].
3. Capital Contributions
   • Partner 1: [Cash or property amount and description]
   • Partner 2: [Cash or property amount and description]
4. Profit and Loss Sharing
   Profits and losses shall be shared as follows:
   • Partner 1: [Percentage]%
   • Partner 2: [Percentage]%
5. Management
   [Partner 1/2 or both] shall manage the daily operations. Major decisions must be approved by both partners.
6. Banking
   A business account shall be maintained at [Bank Name], with signatures from [Authorized Partner/s].
7. Term & Termination
   This partnership will continue unless terminated by written agreement or upon the death/incapacity of a partner.
8. Dispute Resolution
   Disputes shall first be settled through mediation. If unresolved, they will be submitted to arbitration under Philippine law.

Signed this [Date] in [City], Philippines.

[Partner 1 Name]

[Partner 2 Name]

Witnesses:

Final Thoughts

Starting a business in the Philippines without a partnership agreement is like sailing without a map. A clear, well-written contract helps partners operate the business and prevent conflict down the road. Don’t hesitate to consult a professional business registration service to ensure you properly meet SEC partnership business registration requirements and to help partners understand and agree on the Articles of Partnership.

First Time Registering a Business? Here’s Where to Find Help

Registering a business in the Philippines can be a complex and challenging process. With numerous permits and licenses required by the government, it’s easy to miss a document or forget to renew it. Unfortunately, this can lead to costly fines or even force your operations to shut down.

Thankfully, the Business Registration Philippines team provides comprehensive support for your business registration, so you don’t have to stress over the paperwork. 

We’ll handle the permits and renewals so you can focus on what matters most—running your business and achieving financial success.

Contact us today to schedule an initial consultation with one of our experts:

• Contact Us Here
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• Call us at +63 (02) 8540-9623