Club By-Laws Once the legal stuff is properly included in the Partnership Agreement, there are practices for club operation which may vary from group to group. They can be addressed in a set of ByLaws to accompany your PA. The club By-Laws, also referred to as Operating Procedures, describe aspects of operating a club that may need to be changed occasionally. By-laws are generally more easily amended than the partnership agreement. Some items to include are: Meetings: Define when regular meetings will be held, and what the requirements should be for calling a special meeting, by either members or officers. Investment Contributions: Specify the amount of minimum monthly/quarterly contribution expected to remain a member in good standing, and when it is to be paid. Specify if you intend to enforce assessment of a late fee, and the amount. Specify if you want to limit percent of ownership by any one person. Specify the amount, if any, of a startup fee from new members, that will not buy them units. ($50, $100, ?) Valuation: Establish the valuation date for your club. Understand that these periodic valuations set the unit values for deposits made following them, and for withdrawals based upon a partner's value on that date. Management: Specify that each partner will participate in the conduct of the partnership affairs, and whether voting rights will be determined by partnership share, or each person individually. Specify proxy provisions for absent members, and who may hold them. Specify what conditions would allow for the club to automatically terminate a partner's membership, usually failure to attend or contribute for a period of 2 or 3 meetings. Withdrawals: Specify how withdrawals are to be handled by death or incapacity, voluntary, or automatic termination. Determine what, if any, withdrawal fee, dollar amount or percentage, you will assess for each circumstance. There is a 3% retention fee suggested in the Sample Agreement which is really outmoded, and many clubs elect to leave this out. Auditing: It is very important to have a yearly audit procedure in place. You might also require a monthly reconciliation of the bank/broker's statements with the club books, to keep little problems from becoming big ones. Quorum, Voting, Amendments and Dissolution: Establish the percent of members needed to be present in person or by proxy for a quorum to conduct business. Then define the percent of votes needed to transact business of those so present. Decide whether voting is to be by member, or by % of shares owned. One option is to usually vote by member, with the right for members to call for a percentage of share vote on some issues. There can be some drawbacks to percentage voting, so think it through. Specify the procedure to amend the PA, withdraw an inactive partner, or dissolve the club. An advance written notice of such a proposal is usually in order, two weeks suggested. This is by no means all the issues that may be included, or the 'last word' on what they should be. Please feel free to put in another topic, insert a bulleted paragraph with further thoughts, or add a comment below. Below are listed topics which may be discussed in more depth, and links to those that are already available. Click on any of them to go to a discussion of that topic.
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