Profit Distribution Agreement Template for Nigeria

The Profit Distribution Agreement is essential for businesses operating in Nigeria that need to formalize how profits are shared among multiple stakeholders. This document becomes particularly relevant in joint ventures, partnerships, and complex business structures where clear profit-sharing mechanisms are crucial. It must comply with Nigerian legislation, particularly the Companies and Allied Matters Act (CAMA) 2020 and relevant tax laws. The agreement typically includes detailed provisions for profit calculation methods, distribution timelines, audit rights, and dispute resolution procedures. It's commonly used when establishing new business relationships, restructuring existing arrangements, or setting up investment vehicles in Nigeria. The document serves as a critical tool for risk management and ensuring transparent financial relationships between parties while maintaining compliance with Nigerian corporate governance requirements.

1. Parties: Identification and details of all parties involved in the profit distribution agreement

2. Background: Context of the agreement, including the business relationship and purpose

3. Definitions: Key terms used throughout the agreement defined for clarity and legal certainty

4. Profit Calculation: Methodology and basis for calculating distributable profits

5. Distribution Formula: Agreed proportions or percentages of profit allocation between parties

6. Payment Terms: Timing, frequency, and method of profit distribution payments

7. Accounting Principles: Standards and principles to be applied in financial calculations

8. Record Keeping: Requirements for maintaining financial records and supporting documentation

9. Audit Rights: Parties' rights to audit financial records and profit calculations

10. Tax Provisions: Handling of tax obligations and withholding requirements

11. Term and Termination: Duration of the agreement and circumstances for termination

12. Dispute Resolution: Process for resolving disagreements related to profit distribution

13. Governing Law: Specification of Nigerian law as governing law and jurisdiction

14. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment