Members interest in a cc

[AmithS]

Hi Guys & Gals,

I have been browsing around in the forum and have found lots of threads where people have problems selling off there interest in a cc (where there is more than 1 member) due to issues with the other members or no founding statement being in place (not sure what that is all about )

Can someone give me some advice, if i have to gain an interest in a cc that is not worth much now. What do i have to do to cover my self for later....

Thanks,

[BusFact]

The biggest issue I've picked up is the written agreement of what happens when you want to sell later on.

Decide now on issues such as how you will value your share of the cc and can you sell to anyone or must the other members have first option to buy. What happens if you and the other members have a situation where your relationship becomes unbearable and you have to split? How is it decided who gets to stay, who must go and how much they must get paid?

Decide now whilst everyone is still friendly. Get it in writing.

[Dave A]

I agree with BusFact, a really good, written partnership agreement signed and witnessed by all parties is critical.

There is plenty that needs to get covered - some other big ones are:

• voting rights (proportional, equal per member, two rounds?)
• quorum
• valuation of member's interest (to cover forced changes in ownership such as death of a member etc.)
• provision for arbitration and selection of an arbitrator
• working member salaries (and perhaps non-working member salaries too )
• financing policy (when can the cc require the members to provide additonal funding)
• member loan accounts (particularly when a member may demand settlement of a loan account)
• sureties (what happens when a creditor successfully enforces a joint surety against only one member)

I could go on and on... edited and added a couple of times already

It's one of those times when using a good lawyer shouldn't be optional. Unfortunately I've seen more than a few pretty lousy lawyer-drafted partnership agreements too

If you want a good marriage, make sure the terms of the divorce are clearly set out up front