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The success of a close corporation relies on the ability of its members to engage constructively with each other in the daily management of the corporation’s business. In addition, becoming a member of a close corporation is a serious investment of both time and money. But how do you know that your investment is properly protected? Can you be sure that all of the members are completely sure about their rights and obligations when it comes to the management of the company, the sale of their members’ interests and all of the other vital transactions that require constant co-operation between members?
An association agreement is used to record the terms and conditions on which every member of a close corporation will hold their interest in the corporation. It ensures that every member is treated fairly and that the affairs of the corporation are managed responsibility. Because many members initially invest in an amicable context of mutual trust, many fail to take any responsible measures to protect themselves against future disputes between members (or abuses of trust), until it is already too late.
Our association agreement ensures that this does not happen. It provides a comprehensive range of measures to ensure that the interests of all members are protected. For example, the agreement addresses (amongst a whole range of other issues) the following critical issues:
The extent of each of the member’s rights to be involved in the management of the corporation;
The voting rights of the members;
The circumstances and manner in which a member will be entitled, or compelled, to sell their members’ interest;
The manner in which any members’ interest or assets of the company will be valued when a member wishes to sell his/her members’ interest;
The manner in which loan accounts will be dealt with by the corporation;
The way in which meetings of the members will be convened and conducted;
The funding and distribution policies of the corporation;
The protection of members and mechanisms for the resolution of disputes or deadlock.
To remain a member in a corporation without an association agreement is a recipe for disaster. Our association agreement will ensure that all of the members of the corporation are properly protected by carefully crafted terms designed to ensure equity amongst members and the responsible and fair management of the corporation’s business.