Association Agreements are established between CC’s and the members. Although it’s not strictly mandatory to have a written agreement, it is highly recommended in the case of more than one member so as to clearly and unambiguously define roles, responsibilities and dispute resolution amongst other factors. Having a well drafted agreement is thus paramount. It becomes a benchmark that can be used to guide and steer the members of the enterprise appropriately and in order to facilitate the harmonious interaction between the members as well as the successful running of the business.
Although there are some free templates that can be sourced, when it comes to important documents such as these agreements, one cannot compare with proper legal consultation and professional drafting of a tailored association agreement. An experienced commercial lawyer will be familiar will all the requirements and salient points that ought to be included in association agreements. These are summarised next in order to offer an overview of the depth your lawyer will need to delve into when drafting such a document.
- Membership interests and issuing of applicable certificates.
- Possibility of a member’s interest being secured against any loan or other obligations that the member might have with the CC.
- Addressing aspects relating to each member’s contributions.
- Expounding on decision-making processes including aspects such as voting and what constitutes a quorum.
- The establishment of a management committee, similar to a board of directors and covering aspects like their functions, powers, appointment, terms of office, replacement and removal of a member or members in the event thereof.
- The powers of members to bind the corporation, and related aspects.
- Profit distribution elements.
- Handling of loan accounts including member’s loans.
- Aspects relating to binding oneself as a surety when and if needed.
- Selling of members’ interests and how this is to be handled.
- Dealing with membership interest in regards to death, incapacity or insolvency.
- Dispute resolution.
The content of the association agreement is critical and the agreement should define all the necessary terms of the agreement in the context they will be used, clearly and void of ambiguity. The association agreement can make other provisions for anything else that the members want to specifically highlight. Yet again this is where the skills and expertise of a commercial lawyer comes in.
SITL Legal offers specialised and tailored legal services to meet your specific needs when it comes to drafting of association agreements and consulting on matters relating to business entities, members, and much more. Contact us today for further inquiries or visit us online for more useful information.