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Hi Question for you: Can a silent partner become an active partner at some point in the business if the active partners agree and how is this option incorporated into the operating agreement?.
My situation: I am planning to be a silent partner (for now) in a small business (start-up) with friends. Within the next year or so, I would like to become an active partner. How does this work and how do we work this into the paperwork and partnership agreement?.
I have not yet seen any business plan and have been left out of all the discussions and planning sessions. Is this how it is done?. Is it right for the operating partners who are my friends to exlude me from this phase of planning or is this not a good sign?
Hello and thanks for submitting this interesting question. I am a U.S. attorney and do not practice in UAE, but from general research I can tell you that their legal business system is modeled on Western legal systems like UK, EU and US. See: http://www.infoprod.co.il/country/uae2b.htm Generally, the law does not recognize a "silent partnership". If you intend to invest money at the outset, your rights to be, or to become a limited partner or to become a member of any type of LLC or corporation must be established in a written agreement with all concerned at the outset. There is no such thing as remaining on the outside with nothing but a verbal agreement and expecting to be admitted to a position of equity ownership later. As for your specific question: Is it right for the operating partners who are my friends to exlude me from this phase of planning or is this not a good sign? It is definitely not a good sign, and the relationship should be settled upon right now and memorialized with a written agreement, signed by all parties. Also, do not bother to look for a form of such agreement on line. It will have to be prepared by business attorneys who know what they are doing.
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Thank you for your response. I will surely contact you again if I have further questions.