It is that time of year again where many unhappy couples are forced together for the holidays. After sticking it out and staying together for the festive period, some may think is it now time to divorce? You may be nervous about whether you will receive a fair financial settlement if you are not aware of your spouse’s assets or if many of those assets are held within companies that you do not know much about. If this is the case, the separation of your assets may be a little complicated, however the way the Family Court and the Matrimonial Causes Act 1973 treat assets should enable the party without the assets to end up with a fair division.
Assets on Divorce
In reaching a decision on a financial settlement between a couple, the court will apply the factors set out in section 25 of the Matrimonial Causes Act 1973. The factors include such things as the age, and earning capacity of the parties, the contributions each have made whether financial or caring for children, the duration of the marriage, and the standard of living enjoyed during the marriage and the needs of a dependant party. In addition to this all assets held either legally or beneficially by the parties will be drawn into the matrimonial pot to be shared and this includes company assets.
What is a company asset?
What is a company asset? If your spouse holds shares in a company then they have the legal title to those shares. A Company is a separate legal entity and therefore not part of the marital pool of assets, it is the shares that become part of the pool. This means a party must declare their ownership of those shares as one of their assets. Both parties also need to declare all bank accounts, both their own or those held jointly, along with all property, pensions, and income. There is no getting around this for either party, everything must be disclosed; if a party does not give full and accurate disclosure, then it is possible that any order the court makes could later be set aside.
It may not be clear at first that your spouse is actually a shareholder. For start-up companies, this can be particularly confusing. You may know them as a CEO for example, but that would likely mean they are working under a Director’s Service Agreement, effectively an employment contract. If they have started the company then you would expect that they have a significant number of shares and the legal ownership of those shares. As each investment round proceeds, however, their shares may dilute as more investors are allotted shares as part of an investment round. If this happens before your division of assets is finalised it could significantly change your financial outcome. We would hope however that as the money is invested, that the value of the shares increases and so does your division of the marital pot, but that is not always the case and we would urge you to take advice early.
What about other businesses?
If your spouse runs a small business, known as a partnership then a ‘business’ could be either a company of which they are a 100% shareholder or they may be self-employed in a business which is not a company and therefore not a separate legal entity. This means that their share of the business (which may need to be valued) and associated bank accounts are most likely legally owned by your spouse directly. Again, there is a place for businesses, and their value to be set out in the ‘Form E’.
Does my Spouse have to declare their assets?
Each party in financial proceedings is required to give full disclosure of all their assets and could be in contempt of court if they do not declare their assets in full. There are opportunities to ask questions of the other side to obtain further information on what has been provided through Questionnaires within Financial Proceedings and more evidence can be requested if what is provided is not satisfactory. Only reasonable questions can be put forward, therefore picking over several years ago will not be allowed, usually the Court will look at the asset within 2 years of proceedings being issued.
What can I do to find out what my spouse has?
Information about companies in the UK is available to the public on the Companies House website. There you can undertake a search under a company name or a person. This will show any appointments to other companies. Once you are looking at the relevant company it is possible to see a list of shareholders as all this information is available to the public for UK companies. The site gives basic information.
Some international companies or option shares in a company may be more difficult to obtain information on, however, it is not impossible. For most regular UK companies you may be able to do some of the research yourself.
Make sure you give yourself the best chance at obtaining a fair settlement by taking legal advice early. Please contact our family team for more information.