With Mary J. Blige reportedly filing for divorce from her husband and manager Martin “Kendu” Isaacs, we take a look at what you need to be thinking about if you and your spouse are company directors of your business and decide you want to get a divorce…
During the divorce process, businesses are looked at as part of your finances. Knowing what you’d prefer to happen to your business before embarking on negotiations can help to build a solid framework for talks with your spouse and their solicitor. For example, do you still want to be involved in the day-to-day running of the business after you divorce? Or would you prefer a clean break from your spouse? Maybe you’d ideally like to still own a share in the company but not be involved in decision making on a daily basis.
Talking with your solicitor about how you see your business after your divorce will help you to come to an agreement with your spouse that is right for both you and your business.
If you and your spouse are company directors with a 50/50 share of the business, you probably won’t be be able to make any decisions without your spouse’s agreement. It is sometimes possible to put interim measures in place to deal with this – a good corporate solicitor should be able to advise you on this.
If there’s a dispute then courts do have the power to transfer shares between spouses. However, there may be restrictions in your company articles stopping this from happening.
Although unusual, it is possible that if you or your spouse are unable to buy each other out of the business, in a lump sum or instalments, you may have to continue working together after your divorce. Because this can result in an extremely difficult situation, courts try to help couples separate their business interests.
If it’s impossible to separate your business interests, there can be an agreement drawn up that would set out how you and your spouse would run the business and how decisions will be made.
Normally, businesses will be valued by an independent accountant.
It’s very important that you don’t resign from the company until you have talked to a specialist solicitor and an accountant about your situation. There could be various legal or financial consequences for resigning from the business before the financial settlement with your spouse has been reached.
Businesses and what happens to them on divorce is a highly complex area of law and it is very important that you get specialist legal advice before making any decisions about what will happen to your business.
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