Four Reasons to Avoid a 50% Ownership Partnership in a Company

In practice, it often happens that you have an idea and your partner has the money to invest. This idea is tempting but can turn into a business failure.

Therefore, you need to keep in mind the following.

1. The problem of liability in a partnership

Establishment of a partnership in the form of a partnership should, whenever possible, be avoided because of the unlimited joint and several liability of the partners with all personal property for the obligations of the company, and this obligation cannot be limited to third parties. If there are only two partners, you run the risk that in the event of the insolvency of the other partner, you alone are liable for the debts of the partnership with all of your assets.

2. Flexibility problem

Increased liability and reduced flexibility of partnership with 50% ownership in a limited liability company is a legal obligation that when transferring a share to a third party, the shareholder must have the consent of the other owner, otherwise there are only two options available, to remain in the company or to come out of the same.

3. Stability problems

Since each partner has the right to withdraw from the company, the partnership will be terminated if one of the partners leaves the company, which in the case of a partnership and limited partnership may mean that your company will cease to operate.

4. Question of authority

The decisive role of each partner may be more difficult to determine when there are only two partners. Although you can split powers evenly, deciding how to share powers can lead to personal and professional conflicts. Also, the decision-making process itself can be difficult due to the fact that if the members have equal shares in the company and their voting rights are equal, and if the views of the partners are opposed, it can lead to blockade of decision-making and ultimately lead to the liquidation of the company by the partner’s decision because of the inability of the society to be properly managed.

Hiring a lawyer

Last but not least, if you are considering starting a 50% partnership in a company or leaving the company, you should hire a lawyer experienced in business law in a timely manner.