I hope someone can give me some advice on a thorny issue. My husband, together with his parents started a CC in 1993. The CC is exclusively in farming. The CC was started with only a few pieces of machinery and a few tractors. Both his parents were at that time already aged, and wasn't active in the business. The shareholding was divided 60%/20%/20% with my father in law owning the majority shares. There wasn't any association agreement drawn up between them, and it wasn't a problem until now. In 2009 my father in law passed away and his shares were divided between my mother in law, my husband, and his 4 sisters respectively. My husband bought out 3 of his sisters' shares, and when his mother passed away in 2011 he inherited her shares, which makes the shareholding as follows: 90% for my husband, and 10% for his one sister.
My husband made his sister an offer on her shares which she declined on the grounds that his offer was too small. This was acceptable to him, as he was obliged (by his personal values) to pay each of his sisters the same for their shares. The problem is that she has no interest in running a business, but only wants money. She refuses to even set foot on the farm, and is asking for all our financial records with the mind to find anything incriminating so she can apply for the winding up of the company.
Since the company started with virtually no money there was never any salary paid to my husband in 17 years. The CC paid his Medical aid, and other necessary expenses. This was also the case of my parents in law. There was a yearly "harvest share" allocated to each member, against which the expenses was played. I'm not sure how the amount was settled on by the accountant. Since 2010 my husband started withdrawing a salary of R 10k a month. This was raised to R15k a month from January 2012.
So on to my problem: My sister in law has gone to a lawyer who wrote us a letter stating the following:
1. We are using CC funds for private expenses (medical aid, insurance, fuel, etc)
2. We sold assets without her permission (this was done before the estate was settled, and the executors was informed)
3. We have not provided audited financial statements (we don't need to be audited and we did supply financial statements)
4. Dividends were not paid to "some members as required" (no dividend was ever agreed upon, and no member required it)
5. Various other ridiculous accusations
On above mentioned grounds she wants the winding up of the company because that is the only way she will get the amount she want for her shares.
My questions is this:
1. What is a fair salary for a farm manager that does all the decision making and marketing, and generally generates all the income? The CC has grown from nothing to an approximate nett value of R 18 million.
2. Can my husband lease his personal implements and machinery to the CC? Can this amount be played off against his loan account instead of being paid out in cash?
3. Can my husband sell CC assets (tractors or machinery) to himself against his loan account? Does he need his sisters' approval for this?
4. Can my husband buy or sell any CC assets without his sister's approval seeing as he has 90% of the shares?
I really hope you can help me with this, as I am trying to rectify the books to accommodate her. In the past my husband and his parents had a trust relationship, and it wasn't necessary to explain every transaction made.