Silent partnership as a suitable form of investmen



The Civil Code identifies the so-called silent partnership as one of the denominated type of contracts. It is not a typical form of investment or business, but for the case you know about an interesting project this contract type may be of use. A liability between an associate and businessman is established by a silent partnership agreement, whereas the associate wishes to remain anonymous.  The associate may be a natural or legal person, both doing business and not doing business. The associate invests his/her money, or other movable and immovable property, into the silent partnership. The deposit recipient must always be a businessman, e.g. a self-employed person, business corporation, other economy operator. Both parties may be foreign entities. Silent partner´s share in profit and loss The silent partner participates in profit and loss of the businessman. The shares in profit and loss must always be the same, no different arrangement is taken into account. The deposit of a silent partner is not increased by the uncollected profit share. If the businessman suffers a loss, it is not necessary to complement the deposit of the silent partner, it is just decreased.  Liability of a silent partner Only the businessman is obliged from all transactions. The change occurs when the silent partner decides to step back from anonymity. He/she may step back from anonymity against everybody, e.g. introducing his/her name in the company, or against one person, e.g. during negotiation on an order. The silent partner is responsible for businessman´s debts by losing the anonymity. Dissolution of a silent partnership Silent partnership may be arranged for a definite or indefinite period. If the businessman ´s share in loss reached the amount of the silent partner´s deposit, the silent partnership ceases to exist. The silent partnership may also cease to exist by a withdrawal, 6 months before the end of a fiscal period. Other possibilities of ceasing the silent partnership are closing business or bankruptcy of a businessman or of a silent partner. This is our daily matter. If you want to ask how to proceed your case in the best way, feel free to call us at + 420 800 770 888 for free and arrange a meeting with one of our specialists on the Civil Code.