Zimbabwe Partnership Agreement Template

Partnership Agreements in Zimbabwe

A partnership is one of the simplest business structures in Zimbabwe. Two or more people agree to carry on a business together with a view to sharing profits. However, this simplicity is also its weakness — without a written partnership agreement, disputes are almost inevitable.

Under Zimbabwean common law (inherited from Roman-Dutch law), if partners do not have a written agreement, the default rules apply: profits and losses are shared equally, all partners have equal management rights, and any partner can dissolve the partnership at any time. A partnership agreement replaces these defaults with terms that reflect the actual arrangement between the partners.

Partnership vs Private Limited Company

Key Clauses in a Zimbabwe Partnership Agreement

• Partnership name and business — The trading name and nature of the business to be conducted
• Capital contributions — How much each partner contributes in cash, assets, or services, and how additional capital calls are handled
• Profit and loss sharing — The ratio in which profits and losses are divided (this does not have to be equal)
• Partner duties and time commitment — Whether partners work full-time or part-time, and specific responsibilities
• Decision-making — How decisions are made — unanimously, by majority, or with specific reserved matters
• Drawings and salaries — Monthly drawings each partner may take, and whether any partners receive a salary
• Banking and signing authority — Who can operate the partnership bank account and sign cheques
• Accounting and records — Financial year end, record-keeping obligations, and audit requirements
• Admission of new partners — Process and consent requirements for admitting new partners
• Retirement and exit — Notice period, valuation of the departing partner’s share, and payment terms
• Death of a partner — Whether the partnership continues or dissolves, and how the deceased’s share is paid out
• Non-compete clause — Restrictions on partners engaging in competing businesses
• Dispute resolution — Mediation or arbitration before litigation
• Dissolution — Circumstances that trigger dissolution and the process for winding up

Profit Sharing Models

There are several ways to structure profit sharing in a Zimbabwe partnership:

• Equal split — Simple 50/50 or equal shares regardless of contribution (default rule)
• Capital-weighted — Proportional to each partner’s capital contribution
• Salary plus share — Working partners receive a salary; remaining profits are shared by ratio
• Performance-based — Profit share linked to revenue generated by each partner
• Tiered — Different ratios at different profit levels (e.g., equal up to $10,000, then 60/40)

Partner Liability in Zimbabwe

Partnership liability is a critical consideration:

• Joint and several liability — Each partner is personally liable for ALL debts of the partnership, not just their share
• Third-party claims — Creditors can pursue any individual partner for the full amount owed
• Partner misconduct — All partners are liable for wrongful acts committed by any partner in the course of business
• No limited liability — Unlike a company, your personal assets (house, car, savings) are at risk

Tax Implications

Partnerships in Zimbabwe have specific tax considerations:

• The partnership itself does not pay income tax
• Each partner declares their share of profits on their personal tax return
• Partners are taxed at individual marginal rates (up to 40%)
• The partnership must still register with ZIMRA for administrative purposes
• If turnover exceeds the VAT threshold, the partnership must register for VAT
• PAYE applies if the partnership employs staff