Formation Of Partnership
Refer to Partnership Agreement.
Name Of Partnership
Refer to Partnership Agreement.
Term
Refer to Partnership Agreement.
Purpose
To benefit partners, educationally and financially, by investing in securities, while employing fundamental principles and techniques of sound investment practices.
Investment Goals And Guidelines
a) Goals. The Club's investment goals are:
Invest in companies with at least a 5 year history of consistent earnings and revenue growth.
Reinvest dividends and the proceeds from stock sales, or other transactions, back into the portfolio.
Develop and maintain a portfolio that will grow at an average of at least 15% per year.
Develop and maintain a portfolio that is diversified by industry and company size (revenues). Limit investment in any one sector to 20% of the total portfolio.
b) Guidelines. Guidelines governing the Club's investment activities include:
The Club's assets will be invested solely in stock of individual companies and/or in index mutual funds.
While waiting to invest, the Club may keep cash in a money market fund with the Club's broker.
All dividends will be deposited in the Club's money market account and will not be automatically reinvested in the stock generating the dividends.
Once the Club's assets reach $10,000, no more than 25% shall be invested in any one market sector. Each stock shall be classified into one of the following categories:
Basic Materials
Capital Goods
Conglomerates
Consumer Cyclicals
Consumer Non-Cyclicals
Energy
Financial Services
Health Care
Professional and Business Services
Technology
Transportation
Utilities
The club will not invest in amounts of less than $1,000 at a time. As soon as is practical after the cash balance reaches $2,000, the Club must select a specific stock in which to invest the funds.
These guidelines may be waived on individual transactions upon a vote of the Partners.
Meetings (Regular, Special, Quorum)
a) Regular meetings of the Partnership shall be held monthly. Meetings may be cancelled or rescheduled by a majority vote of all partners present in a quorum at a given meeting.
b) Time of meeting shall be from 9:00 until 11:00 a.m.
c) In the month of February, the annual meeting shall be held in conjunction with the regular business meeting at which time new officers will be elected and a full and complete annual accounting of the financial condition of the Partnership shall be made to the partners.
d) Special meetings may be called at any time by the Presiding Partner. Also, any three (3) partners may request a special meeting through the Presiding Partner, in writing. In all cases, special meetings shall be limited to the stated purpose which must be communicated five (5) days in advance to all partners.
e) A quorum of 2/3 of the partners shall be present at any regular or special meeting in order for Partnership business to be conducted, e.g., buy or sell orders.
f) A super majority (75%) of the Partnership shall be present at any regular, special, or annual meeting before the election of officers, amendments to the Partnership Agreement or Partnership Operating Policies can commence. A 2/3 majority of the Partnership is needed to approve amendments to the Partnership Agreement, Operating Policies, or elect officers. Regarding such matters, each partner shall have one vote regardless of his capital account balance.
g) A super majority of total membership (75%) is needed to approve any Partnership business not otherwise specified in the Operating Policies herein.
h) Any partner who fails to attend three (3) consecutive regular meetings and is not excused by the Presiding Partner from attending any such meetings, or six (6) meetings in any twelve (12) month period, will be terminated.
Contributions
a) The investment amount received from each partner shall be a minimum of $100 per month.
b) Each Partner shall contribute an annual administrative fee of $50 due each year at the January meeting.
c) Contributions are made on a monthly basis and are due and payable no later than seven (7) days after the regular meeting. The same shall become delinquent eight (8) days after the regular meeting. Fines will be imposed as follows:
$5.00 fine if contribution is made 9-23 days after the regular meeting
$10.00 fine if contribution is made 24-38 days after the regular meeting
$20.00 fine if contribution is made 39-68 days after the regular meeting
d) Any partner who fails to make contributions to capital when they become due and payable, and who shall continue in default in the payment of such assessments for a period of sixty-eight (68) days, shall, at the expiration of said sixty-eight (68) days, be given notice by registered mail of this delinquency by the Presiding Partner; and if all delinquent payments be not paid within fifteen (15) days from date of mailing notice of delinquency, then said partner shall be automatically terminated.
Valuation
The closing stock exchange prices five (5) calendar days preceding each monthly meeting shall be used to determine the liquidating value of the club.
Capital Accounts
Refer to Partnership Agreement.
Management
a) Refer to Partnership Agreement.
b) A super majority (75%) of the Partnership shall be present to voting on terminating a partner from the Partnership. A 2/3 majority of the Partnership is needed to terminate a Partner.
c) Voting to relieve a partner of his/her duties shall be decided by a simple majority vote of the partners present in a quorum required for such purpose.
d) All voting to elect officers, to admit new partners, to terminate partners or relieve officers of duties shall be conducted by secret ballot.
e) For any other voting, a secret ballot may be called for by any one partner of the Partnership.
Sharing Of Profits And Losses
Refer to Partnership Agreement
Book Of Account
The Partnership shall maintain a complete set of accounts, consisting of assets, liabilities, individual Partnership accounts, appropriate revenue and expense accounts, using the double entry accounting system as prescribed in the NAIC Accounting Manual.
Annual Accounting
a) The annual accounting shall take place in February at the annual meeting, for the preceding year.
b) All financial transactions shall be reviewed semi-annually by the Audit Committee.
Broker Account
a) All checks shall be signed by either the Financial, Presiding or Assistant Presiding Partner. All accounts shall be established in the name of the partnership.
b) All securities shall be purchased in the name of the Partnership.
c) All securities shall be kept with the broker.
d) The Assistant Presiding Partner shall be the custodian of all securities.
No Compensation
Refer To Partnership Agreement.
Additional Partners
a) Seven Partners formed the Partnership.
b) A prospective partner must attend at least three (3) meetings as an observer. Membership must be requested in writing and may be submitted no earlier than at the third meeting that the candidate attends as an observer. At the end of the meeting at which a membership request is submitted, the prospective member will be excused from the meeting and the regular members will stay for an extra fifteen minutes in order to vote on the membership request.
c) A unanimous vote of the membership present in a quorum shall be required for admittance of a new partner.
d) All new partners are required to contribute a $50 administration fee and an initial capital contribution of $200.
e) New members are required to attend training on preparing the Stock Selection Guide and Stock Selection Report during the first three (3) months of membership.
f) All partners are required to be members of the NAIC.
g) Prospective members must be sponsored/mentored by an existing member.
h) Any member who wishes to invite a prospective new member to a meeting shall notify the club prior to the candidate's first attendance as an observer.
Voluntary Termination
Refer To Partnership Agreement.
Withdrawal Of A Partner
Refer To Partnership Agreement.
Death Or Incapacity Of A Partner
Refer to Partnership Agreement.
Purchase Price
a) Refer to Partnership Agreement.
b) The Partnership shall have three (3) weeks in which to complete the buy out.
Duties Of Partners
a)Presiding Partner:
Shall preside at all regular and special meetings of the Partnership and oversee all Partnership activities.
Shall ensure that all resolutions passed by the Partnership are carried out.
Shall appoint members to the Audit Committee.
Shall sign some checks issued against the Partnership checking account.
b)Assistant Presiding Partner:
Shall take the place of the Presiding Partner when the Presiding Partner is absent or incapacitated.
Shall coordinate the portfolio management function of the Partnership for which all Partners are responsible, including portfolio reporting and adherence to the Club's investment policy.
Shall be the sponsor for the Portfolio Management and Stock Selection Committee.
Shall keep a file of all stock selection reports made by the partners.
Shall coordinate the education program of the Partnership.
Shall sign some checks issued against the Partnership checking account.
c) Recording Partner:
Shall keep minutes of all regular and special Partnership meetings.
Shall notify partners of regular and special meetings as described in "Meetings (Regular, Special, Quorum)."
Shall keep a record of attendance for regular and special Partnership meetings.
Shall prepare agenda for regular and special Partnership meetings as directed by the Presiding Partner.
Upon notification by the Presiding Partner or Financial Partner, the Recording Partner will issue notice to any Partner regarding any disciplinary action, and will include the reason and authority for such action.
d)Financial Partner:
Shall maintain a complete set of books as described in Book of Account paragraph above.
Shall, at monthly meetings, provide each partner with a copies of the Valuation Statement, Members Status Report, and Transaction Summary generated by the NAIC accounting software.
Shall prepare and present a monthly statement of liquidating value at regular and special Partnership meetings.
Shall prepare the Partnership Tax/Information Return and notify all partners of their tax liability on the appropriate IRS forms.
Shall receive and deposit all receipts into the Partnership brokerage account and make most disbursements from the Partnership brokerage account.
Shall sign some checks issued against the Partnership brokerage account.
Shall prepare and present monthly brokerage account reconciliation at regular and special Partnership meetings.
Shall act as Agent, placing all buy and sell orders authorized by the partners at regular or special Partnership meetings.
Shall be responsible for maintaining the Club's brokerage account, and shall serve as Agent for the Partnership with such entity.
e) Partner:
Shall pay monthly contributions in a timely manner.
Shall attend Partnership meetings on a regular basis.
Shall, using the Stock Screening Questionnaire, recommend companies for the Portfolio Management and Stock Selection Committee to research.
Shall, from time to time, serve on the Audit Committee.
Shall, from time to time, serve on the Portfolio Management and Stock Selection Committee.
Shall participate in the Partnership education and research activities.
Committees
a) Audit Committee: The Audit Committee shall consist of the Financial Partner and two non-officer Partners. In December each year, the Presiding Partner will appoint two non-officers to conduct an audit of the Partnership's accounting records and present their results at the February meeting. An interim audit may be conducted at the request of any Partner.
b) Portfolio Management and Stock Selection Committee: The Portfolio Management and Stock Selection Committee shall consist of three (3) Partners, each serving on a three (3) month rotational basis. Starting in the fourth month of the Partnership's inception, and each following month, the Committee member with the most tenure on the Committee will be replaced by a non-Committee Partner. Members of this Committee shall on a monthly basis:
Identify companies in which to invest;
Research companies that they and other non-committee Partners recommend;
Evaluate companies using the NAIC Stock Selection Guide and Stock Selection Report;
At each monthly meeting, present research results on two (2) or more companies for the Partnership to consider for investment;
Recommend, as needed, the (additional) purchase or sale of stock in the existing portfolio; and
Provide guidance and training to new Committee members.
In Witness whereof, the partners have set their hand, the year and date stated below:
