Decoupling Your Corporate Romance

It is never easy forging a way through a divorce, especially when your business affairs are intertwined with a spouse.

Here are ten top tips for corporate individuals seeking to restructure their business interests on divorce:

1. Seek the Input of the Company Accountant

Your accountant will already be familiar with how the business operates and the company books, so well-placed to offer valuable insight on its potential value and how any potential restructuring could be best accomplished.

2. Seek Legal Advice

Consult a competent family solicitor specialising in business-related divorces. As a starting point, you should seek to understand your legal rights and responsibilities, essential for navigating the process effectively. It is not unusual for Company Law, Divorce Law, and Employment Law to overlap and each area will have different obligatory requirements which must be followed. So, if your spouse is an employee or a director, you cannot simply sack them because you are no longer getting along!

3. Review your Shareholders or Partnership Agreements

Before making any bold decisions, re-read existing agreements (if you have them) pertaining to ownership, management, and dissolution procedures, which may already provide a blueprint for detangling your business interests.

4. Financial Disclosure

You are under an absolute duty to provide disclosure pertaining to all business assets to help facilitate a fair division of assets during the divorce process. This is still true even if your spouse may have previously just been a ‘silent partner’.  You can expect to be asked to provide copies of your annual trading accounts, management accounts (if you keep them), and possibly even the company bank account statements, together with any recent business valuations you may have had done.

5. Valuation of Business Assets

It is often wise to engage professional expert independent valuers to accurately ascertain the value of your business.  However, such reports are not cheap, so a decision will need to be made as to whether it is proportionate to get one done.

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6. Consider Mediation or Collaborative Practice

Explore alternative dispute resolution methods, such as mediation or collaborative practice, which may preserve business relationships and reduce legal expenses.  

7. Tax Implications

Instruct a tax specialist to assess the tax implications of any restructuring (including capital gains tax, stamp duty and income tax) and consider the most tax-efficient methods available.

8. Division of Business Assets

With the assistance of your solicitor and their savvy negotiation skills, your accountant and financial advisor, determine the best way for dividing business assets, whether via sale, buy-out, company buy-back, or continued co-ownership.

9. Finalising Legal Documents

Instruct your solicitor to prepare a financial consent order to ensure your agreement is legally binding and everyone knows where they stand.  You may also need the help of a lawyer to prepare a stock transfer form, if appropriate.

10. Protecting Future Interests

Once the dust has settled on your new business structure, be proactive and update agreements. Consider prenuptial or postnuptial agreements for any future marriage.  

Our Family Law team at Lamb Brooks have significant experience at dealing with complex divorces involving businesses and commercial interests. For a Fixed Fee appointment to discuss your personal circumstances and secure the best future for your business, please call our Team on 01256 844888 or email: enquiries@lambbrooks.com.

 

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Basingstoke
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01256 471 085
© Lamb Brooks is authorised and regulated by the Solicitors Regulation Authority - SRA No 559661. Lamb Brooks LLP (registered at Companies House OC363909) whose registered office address is: Victoria House, 39 Winchester Street, Basingstoke, Hampshire, RG21 7EQ