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Zaid (owner)     28 April 2015

Need advice on mou when investing in a friends business

Dear Experts,

I am based in mumbai and doing a regular corporate job. I had some savings that I would like to lend my friend to invest in his existing business. The amount is INR 100,000. The understanding is such that I will lend my friend 100,000 which he will use in his small business. This investments makes up about 27% of capital of the business. So he has agreed to share 27% of the profit with me each month.

I do not want to make a partnership deed since it has a lot of formalities. I want to have atleast some legal paper to keep the person in check.

I was thinking about making a promissory note but after going through the forums, I understand MOU works better for my case. I wanted to know if MOU is the best option given my situation? Also, do I need to draft it on stamp paper of any value? eg 100, 200, etc? Or should it be simply drafted on the green agreement paper? Also does it need to be registered or just getting it notorized is fine? Also do I have to affix revenue stamp on it for it to become legally binding?

I am a MSC in international Management so kindly pardon my lack of knowledge in legal jagrons.

Kindly advise what you think is the best for me.

Thank you to who is kind enough to help me with advice.

 



Learning

 2 Replies

bsrao   28 April 2015

Do not have any financial relations/dealings with friends. Some day, you not only loose money (may be of some misfortune as all days are not ours) but also your friend. If you really want to help him, give the money and forget. Enjoy the returns as long as they are paid.

Advocate Kappil Cchandna (Expert Bail & Criminal Defence Lawyer at Delhi Supreme Court of India)     28 April 2015

Sir, Better make a partnership deed, I mean what's the difficulty you entering into that ..... Be a sleeping partner and mention that u be sharing the profit as agreed ... Warm Regards Kapil Chandna Adv 9899011450

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