Initial Capital Contribution
Is a partnership made official when the operating agreement is signed or after all partners make the required initial capital contribution as outlined in the operating agreement?
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What does it say in the agreement? – Casey Software 12 years ago
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As posted above, it depends on what the agreement says, but if payment isn't made, it can be argued that no equity has been issued--there are a lot of facts and circumstances to consider though. – User6492 11 years ago
1 Answer
Unless expressly stipulated otherwise, basic contractual law says the agreement is executed when all parties have indicated acceptance. Reducing this to writing can be a formality but often is just the stage setting for a host of activities (registration, tax identity etc). If the date is such a big concern, then it can be expressly written in that the partnership agreement is deemed to commence on a trigger event (eg same business day that all capital contributions are deposited). However, you might see the chicken-egg situation as no joint bank account can be opened without signatories of all authorised representatives.
So my question to you is what is the burning issue that the date of formation is so critical?
