The members of a Close Corporation each make loans to the corporation for purchase of assets and to cover startup costs. How do the members claims (for the value of their loan accounts) on the corporation rate in relation to other creditors eg suppliers of goods and services to the corporation?(I am doing a valuation of a business to assist the members in establishing a selling price and I'm not sure whether their loan accounts should be included with other current liabilities or ignored for this purpose)
Internet search and search of acts online
Good day Customer!
Welcome back we have dealt with each other before.
The members claims on loan account is also concurrent claims with all other creditors.
There is therefor no preference allowed to the loan account holders or to other creditors in relation to the loan account holders and is therefor equal to each other.
Mark you should therefor show it as a liability!
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Hello Jp,Good to talk to you again. Can you please give me the legal references for your argument ie act, section etc
There is no section that will specifically mention that loan accounts is concurrent creditors, it is just common practice and you do not need to justify same by a section in any act.
General South African Law.
Thanks JP, that helps a lotRegards,Mark Grobler
Your welcome Mark glad i could assist!
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