Hi there,

I am considering investing some money in a new startup company as a silent partner.

The deal is that I come up with the capital, say £10k for a 10% share of the company.

From what I understand a silent partner to be, I give them £10k for 10% of the company, I will be liable to any profits and losses, but will have no say in the running / management of the company.

I have been told that assuming they are in profit, I will receive 10% of the profits each month.


My questions are:

1) What is the extent of my liability to the company should they be at a loss?
Say they end up in debt, would I be liable to pay off 10% of this debt?

2) If I pull out, would I have to find someone who will agree to buy my share, and will I be able to take back the full £10k that I originally put in?

3) They told me that I would have to give 12 months notice if I want to pull out. This sounds too long to me, then they said they could agree on a 9 month notice period. Is this a 'normal' or reasonable notice period in your experience?

4) What legal documents would the company and I need to exchange/have to set me up as a silent partner?

5) If the company files bankruptcy, where does that leave me as a silent partner re. the capital I have invested and liabilities?


Is there anything else I should consider?


Thanks in advance for any advice / pointers!