We discussed the operation of the current account of partners in a previous article and in particular mentioned the reimbursement of contributions. We discuss here in detail the terms of repayment of a partner’s current account.
Reimbursement of the partner’s current account
Principle of reimbursement of the partner’s current account
In principle, if nothing has been provided for on this subject, any partner holding a partner’s current account can request reimbursement of all or part of his partner’s current account at any time.
The company will not be able to:
Refuse on the grounds that their financial situation is complicated, or request a delay from the partner to process the reimbursement.
However, there is a limit: the request for reimbursement must be made in good faith and must not be abusive for the company.
Example: a judgment of the Court of Cassation states that a managing partner who seeks reimbursement of the current account associated to the detriment of the company’s interest and in the placing it in a difficult financial situation commits a mismanagement.
Finally, if a partner or shareholder sells his securities without transmitting his partner’s current account, he can request the reimbursement of his balance because the ownership of the amounts appearing therein has not been transferred to the purchaser. Using the Estimate tax return is important there.
Arrangement of the reimbursement of the partner’s current account
The terms of repayment of the partner’s current account can be adjusted: a blocking agreement can be provided or repayment terms established.
Validity of reimbursement arrangements
For these arrangements to be valid, they must:
Be provided for in the partner current account agreement established between the company and the partner concerned and signed by both parties, or have been decided unanimously by the partners (in the articles of association or in a subsequent act).
The blocking agreement and reimbursement
- If a blocking agreement provides that the funds are blocked over a given period, this means both:
- That the company undertakes not to reimburse the blocked amounts,
- And that the partner concerned undertakes not to request or accept the reimbursement of the blocked funds.
- It is only at the end of the period provided that the funds can be repaid.
Conditions set for the reimbursement of the partner’s current account
It is also possible to provide, by unanimous decision of the partners or in the partner’s current account agreement, the terms of reimbursement of the partner’s current account.
For example, it is possible to indicate:
- That the reimbursement is not immediate and is subject to a schedule,
- That reimbursement requests must be made by one or another means,
- That reimbursement can only take place if the company’s cash flow allows it.
A copy of the public information published by an investment services provider or any other similar foreign body indicating the ratio of equity securities corresponding to newly issued securities and the individual statement that was given to you by the company in whose capital you subscribed and attesting to the reality of the transactions, if the company has not made a commitment in the prospectus for the issue of the securities or it is a subscription to the capital of a holding company.