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Freddie Lombard
Freddie Lombard, Attorney
Category: South Africa Law
Satisfied Customers: 2671
Experience:  Practicing attorney and conveyancer with 16 years post article experience.
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If a Minority Share holder in a Company has taken a Loan from

Customer Question

If a Minority Share holder in a Company has taken a Loan from the company and has not paid back the loan what is the recourse for that shareholder. May the Majority Shares Holder sue the Minority for the amount owed by that share holder especially where this is contributing to the down fall of the company.
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Customer: A Bond was taken out for a some of money for which the shareholders loaned money from. One share holder (minority shareholder) has not paid back 1 cent towards the money she had loaned. This loan is now 8 years old.
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Submitted: 1 year ago.
Category: South Africa Law
Expert:  Freddie Lombard replied 1 year ago.

Hi there

Thank you for your question. I will try to assist you in answering it today but please feel free to ask as many follow up questions as you like until you are 100% satisfied.

First of all, let me start by saying that a company does not act through its shareholders. It acts through its directors.

Therefore, the directors need to take legal action against the shareholder for the recovery of the amount owed plus interest.

If the original agreement (verbal or written) did not mention a date for performance (when the money should be paid back), the directors will first have to send a letter of demand giving the shareholder reasonable time to pay back the money. If he fails to do that, then he is in breach and can be sued.

If the original agreement did have a date for performance which he did not adhere to, he is already in breach and can be sued. Just remember that the normal position is that a debt will prescribe within 3 years of it becoming due and payable (there are exclusions to this rule) so you need to be aware that there is risk involved in allowing a debt to become stale.

I hope this answered your question.

I know it will take an extra minute of your time to rate my service, but if you do not rate it, I do not get paid by the website so I would really appreciate it if you would be so kind as to rate my service positively. Feel free to ask further question here on this topic at no extra cost if you need more information.

Regards

Expert:  Freddie Lombard replied 1 year ago.

I noticed that you posted a new similar question which I have referred back to customer services in order for them to refund you.

Did you receive my answer above?

Expert:  Freddie Lombard replied 1 year ago.

Good afternoon,

This is just a quick note to follow up. Did you find my answer helpful? Is there anything else I can assist you with before you rate the service? Please note that I do not get paid if you do not rate.

Regards