Investment or Loan Legality

[Teagan39]

What is the name of your state (only U.S. law)? Virginia

Two years ago, my husband and friend started a corporation (incorporated) a small business. They each own equal shares for the company 50/50. The friend(partner) put in $40,000 as an investment. On the books (done by accountant, it says Loan). The company is slowly turning a profit now, but has reported taking a loss for the past two years on taxes. The partner has worked minimally in the company (1 day a month to reconcile books/sole financial backer). My husband (president) has worked, but never taken a salary, nor a "draw" from the business. Employees are the only one's receiving paychecks. I'm a salaried employee.

Now, the partner wants out of the business. He wants the business to pay back the $40,000 as it builds its profit. When he gives up his ownership, are we now responsible for paying him (personally) back the money? How does this work? We understood it to be an investment and had no idea he would leave the partnership. What are the legalities we need to be aware of?
Can he demand that we pay the $40,000 plus interest, like you would for a loan from a bank?

BTW, there is no written agreement for repaying the "investment", just an understanding that if there was a profit, it would be split 50/50 (with him eventually getting paid back via incremental "draws" from the account).

Any help would be appreciated!

Teagan