Members interest / loan accounts

[RichardGale]

Hi Guys... In a bit of a tricky situation.

I am a 39% member in a cc. i have two other buisness partners which make up 10% and my BBBEE partner is 51%.

We have come to the end of another financial year end (our third one), and the loan accounts do not balance and never have. The member with 51% is sitting with +- R1,500,000-00 in loan account and i am sitting with +-R1,000,000-00 in loan account.

Now. Does his mean, the member with 51% interest need to put the relevant amount of money back into the business to balance the accounts or should the company pay me out?

On the same subject, my business partner is straight down refusing to pay me out the balance (where do i stand legally here)

If these disputes keep happening how do i secure my members interest in relation to what the company is worth on the books, and is there away for me to leave the cc and claim my portion of the company value?

Any help would be appreciated...

[CLIVE-TRIANGLE]

If I understand correctly, the BEE guy owes the cc R1.5m, while the cc owes you R1m?
The 10% guy?

There are money other questions, but I suppose the main one is: Does the cc have the money to repay you?

[RichardGale]

Hi Clive. Thanks for the reply. I think i may have worded it wrong. My drawings account is on 1m and my business partners drawings account is on 1.5m.

To even the drawing accounts out on the year end financials, either he needs to pay back the balance or the cc pays me out the difference between my drawings account and his drawings account? Thats how i understand it?

The 10% shareholders drawings account is in line with his 10% members interest.

[Justloadit]

The pickle here is the 51% shareholder has the say.
Always be very aware of a single shareholder exceeding 50%, as this shareholder will always be in control.

[CLIVE-TRIANGLE]

To even the drawing accounts out on the year end financials, either he needs to pay back the balance or the cc pays me out the difference between my drawings account and his drawings account? Thats how i understand it?

Hi Richard, ok I understand now.

Section 46 of the Act supports your view, especially the bit in bold:

46. The following rules in respect of internal relations in a corporation shall apply in so far as
this Act or an association agreement in respect of the corporation does not provide
otherwise:
(a) Every member shall be ent itled to participate in the carrying on of the business of
the corporation;
(b) subject to the provision of section 47, members shall have equal rights in regard to
the management of the business of the corporation and in regard to the power to
represent the corporation in the carrying on of its business: Provided that the
consent in writing of a member holding a member's interest of at least 75 per cent,
or of members holding together at least that percentage of the members' interests,
in the corporation, shall be required for-
(i) a change in the principal business carried on by the corporation;
(ii) a disposal of the whole, or substantially the whole, undertaking of the
corporation;
(iii) a disposal of all, or the greater portion of, the assets of the corporation; and
(iv) any acquisition or disposal of immovable property by the corporation;
[Para. (b) amended by s. 8 of Act 38 of 1986.]
(c) differences between members as to matters connected with a corporation's
business shall be decided by majority vote at a meeting of members of the
corporation;
(d) at any meeting of members of a corporation each member shall have the number
of votes that corresponds with the percentage of his interest in the corporation;
(e) a corporation shall indemnify every member in respect of expenditure incurred or to
be incurred by him-
(i) in the ordinary and proper conduct of the business of the corporation; and
(ii) in regard to anything done or to be done for the preservation of the business
or property of the corporation; and
(f) payments by a corporation to its members by reason only of their membership in
terms of section 51 (1) shall be of such amounts and be effected at such times as
the members may from time to time agree upon, and such payments shall be made
to members in proportion to their respective interests in the corporation