Summary A Members’ Agreement (also known as an Association Agreement) may be considered for the mutual protection of members in a Close Corporation, and serves to establish both the members’ respective rights and their obligations in relation to each other.
Why do I need a Members’ Agreement? If your business is a Close Corporation with two members, a written contract can be considered between the members. An Association Agreement, amongst other things, sets out the procedure to be followed if a member wishes to sell his/her members interest, if there is a deadlock in the decision-making, if a member is sequestrated or commits a breach, and policies regarding loan accounts.
See also: Members’ Agreement for 3 or more members
What does the Agreement say? This template Association Agreement consists of: Interpretation; Introduction; Incorporation of Corporation; Members’ Meetings; Matters requiring unanimous agreement; Financing of the Corporation; Management of the Corporation; Valuation; Life Insurance; Transfer of Members Interest; Forced Sales; Disputes; Addresses and Notices; Good Faith; Confidentiality; General.
What does the Agreement look like? The agreement can be printed onto eight pages.
What do you need to do to use the Agreement?
- Read the sample terms of association to ensure that they suit your requirements. Complete the requisite sections, making changes as required.
- Ensure that both the members sign the Association Agreement with each member getting a copy of the final, signed document.
Also viewed: Sale of Member’s Interest Agreement
Also known as: Association Agreement; Terms of Association; Close Corporation Agreement
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