Home | Corporate & Mergers and Acquisitions (M&A) | Incorporation of Maltese Companies and other Commercial Partnerships | Association en Participation
Association en Participation
In terms of the Act, an association en participation is a contract whereby a person assigns to another person, for a valuable consideration contributed by the latter, a portion of the profits and losses of a business or of one or more commercial transactions. Saving any agreement to the contrary, the associating party may not have other associates in the same business or transactions without the consent of his associates.
An association en participation is constituted by an instrument in writing although any such association so constituted is not be subject to any other formalities prescribed in regard to partnerships set out in paragraph 2 above and it shall not have a legal personality distinct from that of its members.
In regard to third parties the ownership of, or other rights over, a thing contributed by an associate is vested in the associating party. In the relations of the parties among themselves, saving any agreement that a thing contributed is to be restored in kind, the associate would, on the termination of the association, be entitled to the reimbursement of the value of his contribution.
A third party acquires rights and assume obligations against and in favour only of the associating party.
The management of the business or of the transactions in respect of which the association was formed is vested only in the associating party. However the associate may, upon an agreement with the associating party, supervise the business or transactions:
In an association en participation arrangement, the associate would in all cases be entitled to an account of any transaction that is completed and, where the association lasts for more than one year, to an annual account of the management of the business or transactions in respect of which the association was formed.
Unless otherwise agreed, the associate would bear the losses in the same proportion in which he partakes in the profits, and his liability would be limited to his contribution.