Selling member share

[Dave A]

Who has signed the lease agreement?

[wynn]

Are those assets in the cc's name or your own as you mention?
How much is still owed on the assets? (furniture, stock, equipment etc)
offer him half of what is paid for, don't include the initial cash/financial input that did not purchase assets. (things like money spent on advertising, teas&coffees, accounting, drycleaning, decorating etc)
Anything else is goodwill which basically has no value.
Any loss he suffers as a result is his school homework!

good luck

[carm]

Thank you for your help so far.

The landlord has the signed lease, we have a copy. Assests at moment is in my own name, as hey are purchased on a foshini account, R18500 is still owed. Today he sold to his mother. She wants R70 000 which was the so called initial investment. How can i stop them from selling out to a stranger? What are my rights in a cc to protect my investment

[Dave A]

Strategically all you want is to buy 1% more of the cc. R70k / 50 = R1400.00. An entirely reasonable investment to obtain control of the cc. After that, who owns the other 49% is not nearly as critical If I was in your position, that would be what I'd strive for as the bare minimum.

It would take someone more familiar with legislation or common law i.r.o. cc's to comment whether you could force this or not, or it might be covered in your articles of incorporation (please tell me you have a copy so that you can check). What you are looking for is anything related to change of members/members' interest.

What also has me curious about this is:

• what exactly are the assets of the cc, and
• what is the trading nature of the cc?

Your statement that each of you are trading separately indicates that effectively the cc may be deemed a rental company renting the premises to two sole proprietors operating their own businesses on the premises. This separation is not entirely without merit given you're in the hairdressing business. By my understanding clients have a tendency to follow the hairdresser more loyally than the salon and this structure deals with the goodwill implications of that quite neatly.

From a posture point of view, you need to hold in your mind that your partner is in breach; it is he who wants to change the original plan and is letting his partner down. You hold the cards, and the choices going forward. Don't be intimidated into just bending to his demands.

You may accommodate him and his wishes, but make it clear it won't be at the expense of your own interests. I'm pretty sure he's going to need your approval of the transfer of interest to his mother, but hopefully someone else will help firm that position up.

[carm]

Hi dave thanks so much for the advice.
The assets are 2 wash basins and furinture. the furniture is still being paid off. The trading nature of the business is hair and beauty and lease is in both our personal names not business. What are articles of incorporation? Is that something we draw up or is given when we register the business.

I cant tell you how grateful I am for your advice so far. thank you