What private agreement to use if I get a friend to setup a Company under his name and I own 50% privately?

If I get a friend to setup an official company with him as the only director. However, I actually pay for 50% of the capital and own 50% of the company (unofficially)? I would like to draft a private agreement between us so that I will own 50% ofthe company (in terms of cash/liability etc... 50% everything of the company). any also he can not stop me should I decide to be officially registered as one of the director with 50% share?

First of all, it is highly recommended that when you have 2 shareholders as you propose, one has 51%, and the other 49%. Otherwise, when there is a disagreement on any issue, the company can be deadlocked. (Source: Harvard Business School)

Are you actually going to incorporate the business? If so, the best way to do this is a SubChapter S (called an S-Corp) corporation. This allows you to receive profits that are taxed at your regular income rate. (The alternative, a C-Corp, is taxed twice - once to the corporation, and you are taxed again when you declare (after tax) profits.

The only way you can get the tax benefit of the C-Corp is an an owner, who holds stock in the corporation. This information is reported on the corporate tax returns, and profits (or loss) trickle down to you, the owners.

That said, if you are determined to have 50% of the company "unofficially," the best way may be for you to have an "option" to buy the shares, which will then be registered once you decide.

These plans are issues ONLY if you are incorporated, with shares in the company which must be reported to the IRS.

If you do NOT incorporate, then everything is "private" and you can have whatever structure you want. Be sure to have an attorney do the paperwork for you, as this isn't a standard agreement.

Good luck.