Investment clubs are a great way for individuals to pool their resources and invest in the stock market. Before starting an investment club, it is essential to draft an operating agreement that outlines the objectives, rules, and procedures of the club.
A well-written operating agreement lays the foundation for the success of the investment club. The agreement outlines how decisions will be made, how profits and losses will be shared, and how members can exit the club. Below is a sample investment club operating agreement that you can use as a reference.
Introduction
The [NAME OF CLUB] Investment Club is established to facilitate the pooling of resources by its members to invest in stocks, bonds, and other securities. The club shall operate in accordance with the rules and procedures outlined in this operating agreement.
Objectives
The objectives of the club are to invest in securities in a manner that is prudent and consistent with the members` investment goals. The club shall strive to achieve long-term capital appreciation while minimizing risk.
Membership
Membership in the club is open to individuals who are interested in investing in securities. Membership shall be limited to [NUMBER OF MEMBERS] members. Prospective members shall be approved by a majority vote of existing members.
Capital Contributions
Members shall make monthly contributions to the club`s investment fund. The contribution amount shall be determined by the members and shall be no less than [AMOUNT]. Members may also contribute additional sums of money to the investment fund at any time.
Investment Decisions
Investment decisions shall be made by a majority vote of the members. The club shall maintain a diversified portfolio of securities, and investment decisions shall be made with the objective of achieving long-term capital appreciation.
Profits and Losses
Profits and losses shall be shared among the members in proportion to their capital contributions. Expenses, including brokerage fees, shall be deducted from the investment fund before profits and losses are calculated.
Meetings
The club shall hold regular meetings, no less than [FREQUENCY] per year. Additional meetings may be scheduled as needed. The club shall maintain minutes of all meetings, and minutes shall be distributed to all members.
Amendments
This operating agreement may be amended by a two-thirds vote of the members. Proposed amendments shall be made in writing and distributed to all members at least [NUMBER OF DAYS] days before the vote.
Conclusion
An operating agreement is essential for the success of an investment club. This sample agreement provides a framework for the club`s objectives, membership, investment decisions, profits, and losses. By following these rules and procedures, the [NAME OF CLUB] Investment Club can achieve its investment goals while minimizing risk.