1. Direct Shareholding
  • Incorporation of an investment company which will acquire for instance real estate properties (“Investment Company”)
  • The investors acquire a direct shareholding in the Investment Company
  • The shareholders agreement and the Investment Company memorandum of incorporation (collectively “the Constitutional Documents”) will regulate the relationship between the shareholders inter se and between the shareholders and the Investment Company and will be similar the master partnership agreement
  • Each shareholder will obtain shares in the Investment Company by contributing “know-how” (IP) or capital in accordance with the Constitutional Documents
  • The shareholders, in accordance with their voting rights, have the right to nominate and appoint directors. Through the appointment of directors, shareholders participate indirectly in the decision making process of the Investment Company. Please take note that nothing prohibits shareholders from also being directors however we generally advise that a company’s board of directors should not exceed 5 directors. The powers of directors may be limited by the Constitutional Documents of the Investment Company and a process developed whereby the directors are prohibited from making any decisions without the prior of the majority of the shareholders
  • The shareholders can enter and exit the Investment Company without any impact on the business and status of the Investment Companies
  • The shares may be transferred (i.e. by sale, inheritance etc.) in accordance with the Constitutional Documents
  • Each shareholder will entitled to dividends according to the distribution policy of the company which can be agreed upon in the Constitutional Documents of the Investment Company (please take note that all shareholders of a single class must be treated equally – the Investment Company may have multiple classes of shares)
  • Depending on the facts, likely the most efficient and convenient structure
  1. Limited Partnership (on shareholder level)
  • Incorporation of the Investment Company
  • Establishment of a limited partnership with a general management partner who will be the shareholder of the Investment Company and hold the shares on behalf of the limited partners (investors)
  • The master partnership agreement will regulate the relationship between the limited partners inter se and between the limited partners and the general partner
  • Each partner will obtain its interest in the partnership by contributing “know-how” (IP) or capital
  • The limited partners are not entitled to take part in the decision making process of the Investment Companies
  • The limited partners are protected from claims from third parties and only liable towards their co-partners to the extent of their capital contributions or as agreed in the master partnership agreement
  • Each time a partner exits the partnership, the partnership dissolves, but the partners can agree beforehand to immediately establish a new partnership
  • Because the general partner holds the shares on behalf of the limited partners,  any change in the limited partners will not affect the status and business of the Investment Company as it trades in its own name
  • The general partner will manage the Investment Company in terms of a management agreement with the limited partners and the Investment Company
  • The general partner is responsible for the residual debts of the partnership and its liability is therefore unlimited
  1. Simple Partnership (on shareholder level)
  • Incorporation of the Investment Company
  • Each investor will be a direct partner in the partnership which holds the shareholding of the Investment Company
  • The master partnership agreement will regulate the relationship between the partners
  • Each partner will obtain its interest in the partnership by contributing “know-how” (IP) or capital
  • The partners are entitled to appoint the directors of the Investment Company and participate in the decision making process of the Investment Company indirectly through the appointment of directors
  • The partners are jointly and severably liable for the debts and obligations of the partnership
  • Each time a partner exits the partnership, the partnership dissolves, but the partners can agree beforehand to immediately establish a new partnership
  • The administration and maintenance of such a partnership is cumbersome