Answer to Question #186194 in Law for Bornface Kandunda

Question

Tuafeni wants to purchase 100% of the member’s interest in Stein Street Thirty Close Corporation. The corporation is the owner of a house in Windhoek. The bank is prepared to lend the purchase price for the member’s interest to Tuafeni, provided that he can provide security for the repayment of the loan. Tuafeni does not own any property. Can you propose a solution to the problem? 

Answer 1

Tuafeni can use the members' interest as collateral for the loan. In case he defaults on the loan agreement the bank is free to take over the members' interest purchased. In essence, Tuafeni needs to convince the bank that the value of the purchased interest is worth the loan required.