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I tried mailing earlier but timed out with a slow link: I'm a 35% partner in a CC in SA and my partner wants to shut it down after he's run it into the ground. Blames everything except his poor business sense and dodgy practices. Can he shut it without me signing off on it? Can I force him to hand it over to me? What are my options?
Optional Information: Province: Gauteng Already Tried: My offer to him as follows: why don't we do the following?:- 1.Let me see what I can do using my own resources. 2.We set an agreement in place with a figure you will accept for your now-worthless shares. 3.we agree that this amount can be paid out of profits generated by sales at a rate of 10% of the nett profit, bearing in mind that this will once again be a ground zero start-up. 4.All Uniglide database, information assets etc be signed over to me to assist in getting this started....there's
Good day. This is an info request to assist you better. Please continue on this thread.Is there any fixed assets in this CC? Does the CC have any debt?
Thye fixed assets are limited and the debt can be covered by some available cash and the sale of a vehicle, which is basically the only asset, apart from some office furniture and fixtures. In short, there is no major debts or need for serious selling up and splitting of assets etc.
Did he react at all to your proposition?
Not as yet. He's a hard-headed obstinate individual who inherited millions, has a lousy attitude and any idea is only good if it's his idea! No, short answer.
And I assume that there is no Association Agreement?
When we were a PTY Ltd company, we had a shareholders agreement but when things went down hill under his guiding hand, he/we changed over to a CC and that, unfortunately, fell by the wayside.
Unfortunately, the ways and reasons on how you can obtain and dispose of membership interest is very limited in the Close Corporations Act and, in you case, will be limited to two options, being you buying the membership interest by agreement or approaching the High Court for an order on how this is to be done.1. Obviously, the best way would be to do so by agreement. I suggest what you do is to get an objective evaluation of the value of the membership interest. Since he is about to close it, "goodwill" is probably at a zero and the value will probably be more in line with assets less liabilities. 2. The second option, being approaching the court, is to be done in accordance with section 36 of the Close Corporations Act and Section 36 only allows you four grounds for such an application. 36. Cessation of membership by order of Court.—(1) On application by any member of a corporation a Court may on any of the following grounds order that any member shall cease to be a member of the corporation:(a)Subject to the provisions of the association agreement (if any), that the member is permanently incapable, because of unsound mind or any other reason, of performing his or her part in the carrying on of the business of the corporation;(b)that the member has been guilty of such conduct as taking into account the nature of the corporation’s business, is likely to have a prejudicial effect on the carrying on of the business;(c)that the member so conducts his or her in matters relating to the corporation’s business that it is not reasonably practicable for the other member or members to carry on the business of the corporation with him or her; or(d)that circumstances have arisen which render it just and equitable that such member should cease to be a member of the corporation:Provided that such application to a Court on any ground mentioned in paragraph (a) or (d) may also be made by a member in respect of whom the order shall apply.You should also remember that it is not enough to merely allege the grounds, it needs to be proved on a preponderance of probabilities.3. There is a third option as well, which would be to liquidate the CC, buy the assets (if you need them) directly from the liquidator and start fresh. If you have any follow up questions, please ask them before you rate the service.
Not sure whether you got my last communication....thanks for the assistance. Knowing how fred operates though, I suspect that I will need the services of a lawyer who can represent me and see this through to a successful conclusion with as little acrimony as possible, If you are able to do this or can recommend someone who won't rape me financialy (lot a large chunk of money, thanks to a dodgy accountant a few years back so i REALLY need to get Uniglide happening again!), that would be appreciated.
Since my last reply to you, this message that you have sent now is the only reply I got. I apologize for that. There does seem to be some bugs in the system and Just Answer/Pearl is working on that.I would love to get involved, but the terms and conditions of Just Answer/Pearl prevents me from giving out my personal details, or to recommend someone specifically. There is a directory of attorneys on www.attorneys.co.za. I can, unfortunately, also not tell how you much it is going to cost. Too many variables, but, this possibly going to result in a High Court matter, it is not going to be cheap, unfortunately. There is nothing that says that you cannot shop around for price when it comes to attorneys, so ask for their fee agreements up front, before you commit, but also make sure that you deal with an attorney that has experience of commercial litigation.
Experience: L.LB, Civil and criminal litigation, contracts, labour and family law
As a reminder:
Unfortunately, the ways and reasons on how you can obtain and dispose of membership interest is very limited in the Close Corporations Act and, in you case, will be limited to two options, being you buying the membership interest by agreement or approaching the High Court for an order on how this is to be done.1. Obviously, the best way would be to do so by agreement. I suggest what you do is to get an objective evaluation of the value of the membership interest. Since he is about to close it, "goodwill" is probably at a zero and the value will probably be more in line with assets less liabilities. 2. The second option, being approaching the court, is to be done in accordance with section 36 of the Close Corporations Act and Section 36 only allows you four grounds for such an application. 36. Cessation of membership by order of Court.—(1) On application by any member of a corporation a Court may on any of the following grounds order that any member shall cease to be a member of the corporation:(a)Subject to the provisions of the association agreement (if any), that the member is permanently incapable, because of unsound mind or any other reason, of performing his or her part in the carrying on of the business of the corporation;(b)that the member has been guilty of such conduct as taking into account the nature of the corporation’s business, is likely to have a prejudicial effect on the carrying on of the business;(c)that the member so conducts his or her in matters relating to the corporation’s business that it is not reasonably practicable for the other member or members to carry on the business of the corporation with him or her; or(d)that circumstances have arisen which render it just and equitable that such member should cease to be a member of the corporation:Provided that such application to a Court on any ground mentioned in paragraph (a) or (d) may also be made by a member in respect of whom the order shall apply.You should also remember that it is not enough to merely allege the grounds, it needs to be proved on a preponderance of probabilities.3. There is a third option as well, which would be to liquidate the CC, buy the assets (if you need them) directly from the liquidator and start fresh.
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