THE CLOSE CORPORATION, THE MEMBER WIFE, AND THE UNAUTHORISED HUSBAND Don't deal with any close corporation without checking that whoever represents it has the authority to do so - otherwise your agreement literally won't be worth the paper it's written on. For example, a property sale agreement was recently held by the Supreme Court of Appeal to be invalid where it had been signed, not by the sole member of the CC which owned the property, but by her husband. Because the husband hadn't been authorised in writing by his wife to conclude the sale, it was held to be null and void. Where immovable property is involved, the authority must be in writing. But even in cases where verbal authority will suffice, play it safe and avoid dispute down the line by insisting on seeing - and keeping on file - written proof of authority. Moreover even when your dealings are direct with a CC's member/s, you should still check for proper authorisation. The High Court recently held that a member holding a 50% interest in a CC could not institute legal action on behalf of the corporation without a members' resolution authorising him to do so. The other 50% member having died, the executor of his deceased estate now stepped into his shoes, and the surviving member could not act unilaterally. As if that doesn't complicate matters enough, note that different rules apply to companies and trusts. Be careful; don't sign anything until your lawyer has checked it for you! Recent Articles for Jun 2010; Source: www.dotnews.co.za |
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