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How to spit a single proprietorship business founded by two persons

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salev_pezu


Arresto Menor
Just want to get your advice. My wife ventured into a business last year. However, because of lack of capital, she accepted the offer of a friend to invest in the business as long as her friend will be a partner. The type of business and the business name were my wife's idea. Because it is easier to setup, my wife agreed to a single proprietorship business under her friend's name with the condition that they will have a memorandum of agreement that both of them own the business.

Both of them invested in the business and both agreed that they will share 50/50 the profits of the business.

However, after almost a year, the memorandum of agreement hasn't been signed and notarized by both parties. My wife's partner barely shows up in their place of work and is not doing her share of responsibilities. What's bothering me is my wife's partner has not reported their income for the past few months and is reportedly using the money to run her other business.

My wife now wants to separate from her partner and divide their investments in the business so she can start with a clean slate. The problem is, she is only depending on their verbal agreement. They have a MOA but it hasn't been signed by her friend.

My wife wants to retain the business name and the place of business because she was the one who initiated the business and found the place of business. Is the business name transferrable? Is it better to get a new business name? How can she compute and divide their investments if her partner doesn't remit their income and expenses for the past few months? What case can we file to her friend if she doesn't want to give up her share of the business?

Your legal advice is most welcome. Please help. Thank you.

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Lunkan


Reclusion Perpetua
Well. It's a big mess, because of your wife agreed to start without having the MOA signed Crying or Very sad Shocked
Because of that she will have very big problem to get ANYTHING legaly, IF she can't reach an AGREEMENT with the other.
If I would be your wife - but I wouldn't because I wouldn't have worked without a signed agreement Smile - I would try to get an agreement NICELY. As LAST try I would THREATH with going to court, but I would probably NOT realy go to court, because of the much work and costs and big risk LOSING the case.

Does she have any WITNESSES, who can tell anything useful for a court case? (E g it's her idea, you have done the work or such...)

IDEA: IF the other just refuse to it's a partnership, then get witnesses, who can tell your wife has worked there much, and DEMAND salary for the "employment", ecause if the other claim it's no partnership, then it has to be employment Laughing Then your wife can demand at least minimum salary plus the fees for SSS, PhilHealth and Pag-Ibig. Perhaps that sum is even more than the partnership deal would have been... Smile

I don't know if business names are transferable in the Philippines. (In my home country it's "transferable" with a small change. (E g "Pinoy Shop Manila" is changed to "Pinoy shop Lopez" (=family name).
BUT because of the other person have made mess, the old business name reputation can be damaged and people can come and demand money for depts BELIEVING it's the old owner, which can make much trouble. So I would probably* change name to avoid that risk, if your wife can make the other person to agree to transfer the business.

*It depend of how much would be lost of old marketing, costs for new signs...

IDEA 2. I don't know if this can function in Philippines: Demand the business in bankruptcy, and then BUY the bankrupted company values from the law person handling that Smile (BUT then can anyone get it bid higher.) BUT even if it function, it can take long time.

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