The cooperation contract, laying down good ground rules

What is a cooperation contract?

A cooperation contract is a document in which you list the agreements between you and your fellow entrepreneurs. Depending on the legal structure, it is also called a CV contract, a maatschap contract, or a VOF contract. The cooperating entrepreneurs are called managing partners or partners. 

You can write a contract yourself, fill in a template cooperation contract, or ask for help from an adviser or civil-law notary.

Why is a cooperation contract important?

A cooperation contract means the agreements are clear to everyone. This helps prevent misunderstandings and arguments.

For example, you agree which authorities each partner has. In other words: who can do what on behalf of the business? If you do not lay this down, the whole business or you personally could be liable for the consequences of one partner's bad decisions.

What is included in a cooperation contract?

You can make the contract as short or long as you want. The most important thing is that the agreements it contains are clear. You always include the following details:

• the name of the VOF, CV, or maatschap
• the purpose of the business
• how long the business will exist or under what conditions it will cease to exist
• what each partner can do on behalf of the business (authorities).

You can also record information and agreements on topics such as:

Partners’ contribution 

Who contributes what to the formation of the business? This could, for example, be money, machinery and equipment. But also knowledge and working hours.

Authority of the partners

What are you and your fellow entrepreneurs allowed to do on behalf of the business? Can everyone make decisions independently or do you make some decisions jointly? Entering into a contract, for example, or hiring staff. You can also agree that you must sign together for any decisions involving more than a certain amount of money.

Remuneration and profit

The aim is for the business to make a profit. Agree on how to divide the profit. This could be in equal parts or based on the number of hours a partner works in the business, for example. You are not employed by the business, but you may want to get an advance on the profits.

Leaving the partnership

What happens if a partner wants to leave the VOV, CV, or maatschap? This also affect the other partners. Agree on a notice period or compensation. Your partnership may also end after you have reached a certain goal with the business. And what happens if you are forced to stop? For example, because the business goes bankrupt.

Death of a partner

Agree what you will do if one of the entrepreneurs dies. By law, a VOF, for example, stops automatically when one of the partners dies. You can prevent this with an agreement in the contract. You may also have to deal with heirs claiming part of the business.

Continuing with the business

If one of the partners leaves or dies, sometimes the business also ceases to exist. Do you want to continue with the business? By yourself or with the other partners? Then include a takeover clause or survivorship clause in the contract. Also consider the tax implications.

Illness and incapacity for work

What happens if one of the partners falls ill and can no longer work for the business? You can agree that you will each take out disability insurance. Or stipulate how long you will continue to pay the partner if they are unable to work due to illness.

Valuation

Does someone leave the partnership? Then you must decide the value of the business. Agree in advance how you will arrive at a valuation for the company and who will appraise it for you. Based on the value of the business, the partner who is leaving should be paid their original contribution and part of the value of the business. Or they will have to pay extra, for example if there are debts. Also consider tax implications.

Resolving conflicts

Usually, at the start of a partnership, you do not think about the fact that things can also go wrong sometimes. But when you draw up the contract is the best time to make agreements on how to deal with conflicts. Consider asking someone to act as intermediary or mediation.

Register agreements in the Business Register

If you start a VOF, maatschap, or CV, register all managing partners or partners in the Business Register. You can also record certain agreements from the cooperation contract in the Business Register. This allows others, business partners for example,  to view these agreements.

Third party effect

Most agreements will only apply to you and your co-entrepreneurs. But some matters also involve others, such as business partners. For example, if you agree that for contracts and purchases above a certain amount you must sign together, others must abide by this too. Such agreements are called third-party effect. Third-party effect protects you as cooperating entrepreneurs, but also your business partners.

Example of third-party effect

Your cooperation contract states that you must all sign for amounts above €10,000. You have registered this agreement in the Business Register. Yet one of you enters into a contract for a €20,000 machine. You can then reverse the contract, because the seller could have known that your colleague was not allowed to conclude this contract.

The details KVK registers in the Business Register as standard are:

1. Duration: how long will you work together?
2. Purpose: what do you want to achieve with the business?
3. Authority: who can do what on behalf of the business?

These agreements are therefore subject to third-party effect. In addition, you can choose whether you want to record any other agreements in the Business Register.

Bring the cooperation contract to your registration appointment with KVK.