How silent can a silent partner be?

**BusFact** · 05-Apr-12, 05:07 PM

If I bought a 100 shares in Standard Bank I'd essentially be a silent partner, purely due to the low value of my shares and hence low voting rights. So no issue from SARS or CIPC.

But the others above have raised some real world problems you have to seriously give thought to.

**rfnel** · 05-Apr-12, 06:25 PM

Originally Posted by Dave A

I regret my imagination is now starting to fire up again, and it's telling me - be careful here my friend. This could be rocky ground and avoided if possible.

Thanks Dave. I'm keeping a close eye on the development of our updated association agreement, just to make sure that all my bases are covered.

When (not if) I go into a business again, I think I'll prefer to go at it solo; partnerships cause way too many hassles.

**sterne.law@gmail.com** · 06-Apr-12, 09:43 AM

Why would your partner want to give a share away? If he wants them to have income he can merely pay them the money in a personal capacity.
I would be concerned that it is in order that they may have a form of equity, which means they may plan to use it as security.
Alternatively why dont tehy form a trust and teh trust can then hold his share holding.. Your situation then remains pretty much the same as i ftehre are 2 partners. The trust can vote and squablle about their share and voting etc,

**rfnel** · 06-Apr-12, 11:14 AM

Originally Posted by sterne.law@gmail.com

Why would your partner want to give a share away? If he wants them to have income he can merely pay them the money in a personal capacity.
I would be concerned that it is in order that they may have a form of equity, which means they may plan to use it as security.
Alternatively why dont tehy form a trust and teh trust can then hold his share holding.. Your situation then remains pretty much the same as i ftehre are 2 partners. The trust can vote and squablle about their share and voting etc,

My partner has family in the USA, and the CC holds an interest in a company over there. According to my partner, by giving a part of his share to his family it will be easier for all of them to get visas to work in the US.

**sterne.law@gmail.com** · 10-Apr-12, 08:03 PM

Not sure on the USA visa's but probably some similarities to SA.
So they may be looking at a business visa, hence the need for shareholding or other visa requre income such as a pension.
I suppose one has to look at the manner in reaching the end goal for your partner without placing any one at unneccessary risk and maintaining the working relationship. Again, is the trust as shareholder an option for your partner?
Even if I am a silent partner, nothing precludes me from disagreeing and protecting my investment. perhaps an exit strategy is required, whereby if the new partners dont "abide" by the agreement there is a termination and the shares revert back to the partner or a buyout at a "predetermined" formula, possibly at a slightly discounted rate to discourage the silent partner becoming a booming voice.