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Before You Do This · Corporate Governance
Ownership, decision rights, money in and money out, and what happens if one of you wants to leave. CAMA 2020 shapes the structures available to you.
The situation: You are going into business with someone
Business partnerships rarely fail over the thing the parties negotiated. They fail over what nobody wanted to raise while everyone was optimistic: what happens if one founder stops working, wants out, dies, or wants to sell to someone the others cannot work with.
CAMA 2020 provides the structures - companies, limited liability partnerships, limited partnerships and business names - and each carries a different answer on liability, ownership and exit.
What the law is doing in this situation, and which instrument it sits under. These are general explanations, not an assessment of your circumstances.
The structure decides who is exposed
A registered business name does not create a separate legal person; the individuals carry the liability. A company or a limited liability partnership does, and that separation is the main reason to incorporate rather than trade jointly under a name.
Companies and Allied Matters Act 2020
Equity is not the same as control
Shareholding, board composition and reserved matters are three separate questions. Equal shares with no deadlock mechanism is one of the most common ways for a working business to become unmanageable.
Contribution should be defined and vested
Money, time, assets, customers and intellectual property are all contributions, and they are rarely made at the same pace. Vesting over time protects the partner who stays from the partner who leaves in month four holding a founding stake.
Put the intellectual property in the business
Where founders build before incorporating, the intellectual property often sits personally. It should be assigned to the entity expressly and in writing, along with anything contractors produced.
Copyright Act 2022
Agree the exit before you need it
Transfer restrictions, pre-emption, buy-out mechanics, valuation method, and what happens on death, incapacity or a partner competing. A valuation formula agreed in advance is worth more than a fair one argued later.
Money out needs its own rules
Salaries, drawings, dividends, expense policy and reinvestment. Most founder conflict about money is about the absence of a rule, not about the amount.
These are ordinary and usually well-intentioned. That is exactly why they are worth naming.
None of these is proof of bad faith on its own. Two or three together is a reason to slow down.
Work through these before you commit. They are educational prompts, not a compliance certification.
When to speak to a lawyer