new member to existing club

Mary Carroll on

Our club will be entering it's third year in January 2010.
We have one member leaving at the end of 2009. I've read
the previous buy out questions and understand somewhat the
merits of transferring shares of a stock that have gains and
assume that transaction would be handled for a fee through
our E-Trade Account. To get to the actual amount I also
assume that some cash will be used for the difference
between the exact value of the stock transferred and the pay
out amount. Our big questions is what amount we should ask
a new member to pay to join in January of 2010. Ideally
we'd like to have her pay the same amount as the pay out of
the member leaving but think it would be difficult to find a
willing participant. If a new member joins in 2010 and
pays say 150.00 how are her Units Valued? We have always
maintained equal units for our existing members since we all
joined at the same time. Another issue might be voting
rights. Should she have equal voting rights even though she
is not equal financially? This is a new challenge for us so
we would really appreciate your thoughts on this matter.

iras1 on

There is no need to maintain equal ownership, and it's actually counterproductive. What do you do if someone misses a month? If you are using one of the club accounting software packages (and I assume you're using bivio since this is bivio's site), it handles all of the valuation issues. The new member gets exactly the number of units that s/he is entitled to based on the amount of money contributed. Future income and expenses will be allocated on the basis of percentage ownership.

Voting rights will be determined according to the language of your partnership agreement. The model BI agreement calls for voting by ownership share (the new member will have a smaller vote than the original members), but many clubs use "one person, one vote".

Ira Smilovitz

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In a message dated 10/15/09 23:46:34 Eastern Daylight Time, marycar54@bivio.com writes:

Our club will be entering it's third year in January 2010.
We have one member leaving at the end of 2009. I've read
the previous buy out questions and understand somewhat the
merits of transferring shares of a stock that have gains and
assume that transaction would be handled for a fee through
our E-Trade Account. To get to the actual amount I also
assume that some cash will be used for the difference
between the exact value of the stock transferred and the pay
out amount. Our big questions is what amount we should ask
a new member to pay to join in January of 2010. Ideally
we'd like to have her pay the same amount as the pay out of
the member leaving but think it would be difficult to find a
willing participant. If a new member joins in 2010 and
pays say 150.00 how are her Units Valued? We have always
maintained equal units for our existing members since we all
joined at the same time. Another issue might be voting
rights. Should she have equal voting rights even though she
is not equal financially? This is a new challenge for us so
we would really appreciate your thoughts on this matter.

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