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Thread: CC loan account and profit shares from sale of assets

  1. #1
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    CC loan account and profit shares from sale of assets

    I was hoping that someone could please advise me on member loan accounts in a closed corporation.

    There's 2 members in the corporation and the CK1 states that the members have 50% shares

    The loan accounts are:
    Member 1 R428 171
    Member 2 R273 823
    Total loans R701 994

    When the company assets are sold and member 2 resigns from the corporation what should happen to the loan accounts and how should the profit be shared between the members?

    Letís use a profit of R 750 000 as an example

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    Both issues should be solved by agreement and member 2's resignation should be part of that agreement, and the last step.

    Normally you would expect that loan accounts are first settled, then profit is appropriated. Assuming profits are available in cash, then it should be shared between them equally.

    The members are free to agree differently, with the exception of a distribution, which the Act requires be in proportion to the shareholding.

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