Two issues - Unequal % could breed issues amongst people and it leaves the club open to drmatic decisions when a person with high percentage departs

Once you have person(s) with high %, difficult to obtain consensus on actions

I say limit to 12% of club and keep person at minimum contribution level until % decreases to a particular %. If never, never

I have had this issue with two clubs

We still have person at above 20% - long term member - longest serving member - all rest trying to catch up with larger donations
.

My advice is to nip in the bud in partnership agreeements.
--------------------------------------------
On Thu, 4/28/16, Jason Brand <jbrand@grrp.com> wrote:

 Subject: [club_cafe] Question: Member Percentage Limit
 To: "club_cafe@bivio.com" <club_cafe@bivio.com>
 Date: Thursday, April 28, 2016, 7:12 AM
 
 
 
  
  
 
 
 
 
 I am
 wondering if other clubs (in their constitution/charter)
 have a limit on the percentage a single member can have in
 the club (e.g. 20%, 25%, 49%, etc…)?  What is
 that limit and why was it chosen? 
  If the member hits or exceeds that limit, what is the
 response?
 
  
 Thanks,
 Jason
 Brand
 
  
   
 
 

If the club has been around many years it is inevitable that members of the club from inception will have a much larger stake than newer members, even just contributing monthly dues. This becomes highly relevant in decision making regarding sale of stocks with a considerable gain because the long term members may incur considerable capital gains taxes unaccompanied by income and therefore have an inherent bias against sales that result in considerable gain. I realize of course that the the gain increases the members cost basis so it eventually all comes out in the wash but not until the member leaves by withdrawal or death.

That being said we have not solved or substantively addressed the issue.

Dave Rowekamp
Roundtable Investment Club
Winona, MN

Sent from my iPhone

> On Apr 28, 2016, at 07:57, IRINA CLEMENTS <irina39@verizon.net> wrote:
>
> Two issues - Unequal % could breed issues amongst people and it leaves the club open to drmatic decisions when a person with high percentage departs
>
> Once you have person(s) with high %, difficult to obtain consensus on actions
>
> I say limit to 12% of club and keep person at minimum contribution level until % decreases to a particular %. If never, never
>
> I have had this issue with two clubs
>
> We still have person at above 20% - long term member - longest serving member - all rest trying to catch up with larger donations
> .
>
> My advice is to nip in the bud in partnership agreeements.
> --------------------------------------------
> On Thu, 4/28/16, Jason Brand <jbrand@grrp.com> wrote:
>
> Subject: [club_cafe] Question: Member Percentage Limit
> To: "club_cafe@bivio.com" <club_cafe@bivio.com>
> Date: Thursday, April 28, 2016, 7:12 AM
>
>
>
>
>
>
>
>
>
> I am
> wondering if other clubs (in their constitution/charter)
> have a limit on the percentage a single member can have in
> the club (e.g. 20%, 25%, 49%, etc…)? What is
> that limit and why was it chosen?
> If the member hits or exceeds that limit, what is the
> response?
>
>
> Thanks,
> Jason
> Brand
>
>
>
>
>
>

<<
If the club has been around many years it is inevitable that members of the club from inception will have a much larger stake than newer members, even just contributing monthly dues. This becomes highly relevant in decision making regarding sale of stocks with a considerable gain because the long term members may incur considerable capital gains taxes unaccompanied by income and therefore have an inherent bias against sales that result in considerable gain.
>>

That's not exactly true. If the club sells a stock with substantial gains, each member will share in that reportable gain in proportion to the percentage of ownership. So, under the writer's premise, a short-term member will have a lower investment, and thus a lower percentage of the gain to report. A short-term member who has made a substantial contribution WILL be in the unfortunate position of reporting capital gains where no gain has actually occurred.

As to the merits of putting limits on the percentage of ownership, I have always been a believer in the 'one-person, one-vote rule'. If a club operates on that platform, high percentage of ownership by one person does not present a problem.

Rip