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Thread: What is my rights as a 30% shareholder in a CC

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    What is my rights as a 30% shareholder in a CC

    Hey all, I'm new here, so pls bear with me!
    I'm in business with my dad, me 30% , he 70%, its been like this for 5 years now.
    My dad managed the business before he got the opportunity to bvx it. He brought me on board as a 30% CC partner. After I got into this, we got into arguments, and I talked to the previous owners, and I found out that they actually sold the business, because of the problems my dad gave them.

    So I was stuck, but I kept on trying till this day. Recently we got into fights again, which lead to my dad making changes to my salary and benefits, my wife got fired, and and and. I always felt sorry for him, because he is actually very sick, and not capable of coping on his own. But due to his unfair behaviour I dont feel sorry for him. I cant just leave, as I signed surety for debt the business have, and I put a lot into this business.
    My problem is, when we started the cc, we signed an agreement that whoever dies, there is insurance getting paid out, which is then used to buy out the deceased members shares. During our fights he said that he will change that agreement that I wont get the business when he dies, and that he will change te insurance, so my mom is the only beneficiary of the insurance, so I wont be able to buy his shares.

    Now my questions are, can he change such agreement between us, without me as a 30% shareholder, can he change the insurance beneficiary which is in the company name, can he sell his shares to anyone, while there is such an agreement between us, and lasty, if I'm not happy with business decissions he makes, can I do anything acout that?

    I know this may seem like me being a ungrateful brat, but I gave my all this past 5 years, while he just " breaks down" with his ideas and schemes, affairs with female staff, etc. In my meaning he is too old and sick to be in the position he is, but as it is with old people, they dont trust the young. I did offer a installment - based buy out of his shares, but he is not interested. So for now I just need to be sure this business is still mine in the end.

    Thanks

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    Silver Member Greig Whitton's Avatar
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    Quote Originally Posted by blue-eye-boy View Post
    I'm in business with my dad, me 30% , he 70%, its been like this for 5 years now.
    Quote Originally Posted by blue-eye-boy View Post
    if I'm not happy with business decissions he makes, can I do anything acout that?
    That depends on the CC founding statement and what it has to say about member decision making. If the founding statement is silent on the matter, then the default shareholder resolution provisions (as set out in Section 65 of the Companies Act) will apply. These default provisions require approval from 50% of a company's voting rights to pass an ordinary resolution and 75% for special resolutions. Special resolutions are needed for "big decisions" like dissolving the company. So, with 70% ownership, your father can largely do as he pleases but doesn't have complete control.

    That said, Section 163 of the Companies Act empowers shareholders and directors to approach a court for relief in the event of oppressive or prejudicial conduct. So if your dad abuses his 70% ownership to the extent that it compromises your rights and interests as the minority shareholder, you could take legal action. However, it goes without saying, that pursuing legal resource against a relative tends to be the death knell for the familial relationship (especially if it was strained to begin with).

    Quote Originally Posted by blue-eye-boy View Post
    Recently we got into fights again, which lead to my dad making changes to my salary and benefits, my wife got fired, and and and.
    These are matters of employment law. Regardless of your dad's majority ownership position, he can't make unilateral changes to any employee's contract (including yours) or fire people without a fair reason and after following proper procedure.

    Quote Originally Posted by blue-eye-boy View Post
    when we started the cc, we signed an agreement that whoever dies, there is insurance getting paid out, which is then used to buy out the deceased members shares. During our fights he said that he will change that agreement that I wont get the business when he dies, and that he will change te insurance, so my mom is the only beneficiary of the insurance, so I wont be able to buy his shares.
    Quote Originally Posted by blue-eye-boy View Post
    can he change such agreement between us, without me as a 30% shareholder, can he change the insurance beneficiary which is in the company name
    That depends, firstly, on what the agreement has to say about changing the insurance beneficiary. Assuming nothing in the agreement has any bearing, it becomes a "company decision" and my comments earlier about member decision making and prejudicial conduct would apply.

    Founder of Evergrow - Helping South African business owners grow their business without the growing pains

  3. Thank given for this post:

    BusFact (26-Feb-15), Dave A (26-Feb-15)

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