Loading...

The corporate implications of divorce

12 July 2021

If you’re a business owner going through a divorce or separation, it pays to think about what kind of effect the split will have on your business.

Under the law, a company is an independent legal identity, with the same rights as a person. When courts make decisions regarding property settlements, who owns what in a company or business will also be considered.

In a recent case, a couple had divorced after a relationship of 11 years.

The husband had two previous marriages and eight children, and had started his business decades ago. He owned 50 per cent of the company, and a second company owned the other 50 per cent. The husband had 99 per cent of the shares in the second company.

The courts decided on a property settlement, but the wife decided to appeal that decision and the initial property settlement was set aside and a re-trial was ordered.

In between the two property settlement trials, the husband transferred all his shares in the second company to his children.

During the re-trial, the wife asked the court to consider whether the corporation was a “mere puppet” of the husband or a separate legal entity.

The husband contended that, as he had transferred all his shares, he was no longer in control of the company. But it was the wife’s position that, as the shareholders were his children, he was in fact still in control of the company and that the company was the “alter ego” of the husband.

In the end, she did not have enough documentation to support her claim and the appeal was dismissed, however the wife did end up receiving a larger property settlement than had initially been decided.

In property settlements, it’s common for people to argue that a corporate entity and a person should be considered as one and the same. And that means that the assets of the company should be considered as being available for the asset pool, as part of the property settlement.

An analysis of a company’s constitution and shareholders agreement is needed before using the argument that the company is a “mere puppet” of the person.

It is also necessary to consider the extent to which the Corporations Act may impact the rights and obligations of the shareholder, including whether there are rights and obligations conferred by the Act that supports a finding that the corporation is a “mere puppet” of the party.

This can be a complex area of law and it’s important that you get the right legal advice if you, or your spouse, control or own a company.

There are a number of ways to protect your business before marriage, but if separation has already happened and there are no agreements in place, the fate of your business is in the hands of the judicial system.

If you need help with separation, divorce, finalising a property settlement or any other aspect of family law, please contact Michael Lynch Family Lawyers on: (07) 3221 4300 or email: [email protected]

Image to accompany an article "The corporate implications of divorce"
2021-07-14T16:13:33+10:00

Client Testimonials

Thank you very much to everyone at Michael Lynch Family Lawyers. Thank you for helping me get my life back and make a fresh start. To have that fresh start without fear and anxiety is priceless.

A.A., Perth

At Michael Lynch Family Lawyers I got professional and ‘no-nonsense’ advice, costs were within quoted amounts and my matter was resolved quickly – well done!

L.R., Ascot

My solicitor is a good listener. My documentation maintained the high moral ground.

S.S., Hamilton
I appreciate you being upfront with fee estimates. You also have a fantastic website and the seminars REALLY helped to get me focussed.
T.C., Tarragindi
Thank you for providing me with a professional yet empathetic approach to gain the best outcome for me. My solicitor was excellent in explaining the processes and in representing me in Court. You have great customer service!
T.V., Everton Park

Your staff is knowledgeable, professional and very calm.

A.C., Helensvale
Amy, thank you. You have been diligent, accurate and pro-active for the entire duration of my matter. I appreciate it.
R.P., Cleveland
I was impressed by my solicitor’s attention to detail and her concern for me, and that the process was explained to me and that I understood it at all times.
B.W., Chapel Hill

You, guys, provide extraordinary service.

A.O., North Brisbane
Thank you for the outstanding legal advice you have provided and professionalism in which you conduct yourself. I am truly thankful that it was you who represented me.
M.T., Stafford
Thank you for the great newsletter. Your article on “Coping with Christmas” is brilliant – clear, caring and helpful. Thanks again!
C.T., Bribie Island
May I take this opportunity to express my gratitude to you and your staff for the excellent professional services I received. In a word, priceless.
D.H., Hendra

Thank you for being very personable, professional and always providing me with the most appropriate advice in my times of difficulty. The other party’s lawyers were extremely aggressive, while Michael Lynch Family Lawyers remained calm and professional.

S.D., Parkinson

I have appreciated the way that you and the staff at your firm have handled my situation. I would especially like to mention the professional and caring way my lawyer conducted my case, I am deeply grateful and extremely happy with the results. I will be referring others to your service.

J.H., Wellington Point
Amy, thanks very much to you and your team. Throughout my dealings with MLFL I have been continually impressed with your level of professionalism and, in particular, your understanding of circumstances and the articulate way you conduct yourself. I was completely satisfied with today’s outcome and without your experience and expertise in family law I doubt that the result would have been achieved.
M.R., West End

I would like to thank your firm for the support and compassion shown while dealing with my matter.

C.M., Brisbane
Lovely to deal with and provides a balanced view in what are very difficult circumstances.
A.C., Morningside
Thank you for your ongoing conciliatory approach in this matter and as always I appreciate your level headed advice. I certainly feel that I ended up with the right Solicitor.
S.C., Nundah

I’m very glad ‘Michael Lynch Family Lawyers’ is my lawyer and not the other side’s solicitor.

S.S., Hamilton

My lawyer was the most knowledgeable of all lawyers I spoke to when looking for a lawyer. Michael Lynch Family Lawyers showed professionalism.

R.R., Brighton
Amy’s work was extremely professional but above all she has a manner and wisdom in dealing with people under stress. I will be recommending your firm to anyone that requires assistance.
K.H., Augustine Heights

My lawyer has been an amazing help through this stressful time. I will remember her help for the rest of my life. Thank you.

J.H., Brisbane

I was always confident that I was getting the very best advice.

T.S., Flinders
If I need a family lawyer in the future I’ll be heading to Michael Lynch Family Lawyers again.
C.W., Brookfield

I was very impressed with the initial interview. Everything was well-explained, and the advice was honest about what I should expect.

C.M., Morningside
I like your friendly service and the ability to speak to my solicitor directly.
R.G., Wishart
Michael Lynch Family Lawyers always gave me competent and knowledgeable advice. I was consistently kept up to date. The meetings and phone calls were kept business-like, yet caring and thoughtful of my emotional state at the time. Thank you.
J.S., Holland Park

Michael Lynch Family Lawyers are easy to deal with, and your systems are good.

D.T., Ferny Grove

I really liked the personable service by Michael Lynch Family Lawyers, the simple plain language you adopt and everyone’s patience.

A.O., Kedron
I liked my solicitor keeping things as simple as possible.
S.M., Clayfield

Thank you, you kept me sane in a difficult situation and gave me the encouragement and the confidence to keep going. You made me feel extremely comfortable.

A.M., Chambers Flat
My solicitor provided a personalised service, prompt and quick responses and cost information prior to my commitment.
G.C., Southport
I always felt that the service provided by Michael Lynch Family Lawyers was of a high standard. Each time, after appointments I came away feeling secure. Keep doing what you are and maintain the ‘family feel’ that permeates your services.
C.W., Brookfield
Your team’s communication with me was exceptional, I knew exactly what was happening.
A.A., Eatons Hill
So pleased to have had a good, sound and knowledgeable firm.
C.W., Brookfield
Michael, thank you again for your presence here yesterday. We really appreciated the clarity and accessibility of your presentation. It is a rare thing to find somebody who not only has expertise, but also has a skill in communicating it.
J.S., Brisbane
Many thanks for your assistance – life is now great – I’m moving on.
J.K., Mansfield

After utilising the mediation services team recommended by your organisation, my ex-partner and I were able to reach some interim agreements about parenting. I am incredibly grateful for the advice provided by Debra Effeney; and found your firm’s services to be exceptionally professional. If we needed to consult a family lawyer in the future, we would have no hesitation in reconnecting with your firm.

K.M., Paddington
Your newsletters are great, I appreciate them.
K.B., Carina

Many thanks to Stephanie for her help and support through this time, I was incredibly impressed with her work.

L.K., North Lakes
The professionalism and reliability delivered by Amy Honan was fantastic. I had an urgent matter around my property sale and Amy offered to provide assistance over a weekend if I required it – that’s above and beyond!
E.F., Nundah

Thank you for helping me through this difficult time. You have been caring, compassionate and efficient. Some of my divorcing friends have not been so fortunate. In my mind, you are the best family lawyer in Brisbane. If anyone I know needs a good family lawyer, I will tell them to speak to you. Thanks again.

B.T., Clayfield

I just wanted to get in touch to say thanks for helping me get through my custody and settlement. Thanks again to you and your staff. You have had a significant positive impact in my kids’ lives!

B.S., Brisbane
I really appreciated the happiness of your secretarial staff.
G.C., Clayfield
Amy, thank you for all that you have done during this matter. You impressed me with your professionalism from our initial meeting, and you have proven beyond doubt, to have had the skills and knowledge required. You are a credit to the company, and I would highly recommend you to anyone in a similar situation.
R.P., Cleveland
Your team is professional, warm, friendly and real.
N.R., Crows Nest
The staff at Michael Lynch Family Lawyers were great. Everyone was fantastic, professional, understanding, caring and always communicated with me. I knew I was in good hands.
A.A., Eatons Hill

Michael Lynch Family Lawyers know what they are talking about.

R.M., Warwick
Michael is very personable and very good at covering the material and explaining the strategy.
J.O., Hawthorne
Thank you, you placed my needs first, you were aware of the need to reach a final result and not get caught up in the personal issues of the other party.
S.L., Moranbah
A personalised and professional service. Information has been clear and provided timely to assist my decision-making.
S.S., Hamilton
My lawyer acted with professionalism in all her dealings with me and with the lawyer on the other side. I was always kept in the loop. I liked her approach. Thanks.
D.S., Coorparoo
I was guided through a really difficult time with expertise of Michael Lynch Family Lawyers. I am more than happy with the outcome of mediation.
J.H., Windaroo
I like that my lawyer treated me like a friend and kept jargon to a minimum. She was easy to contact and kept me informed.
L.R., Samford
Michael Lynch Family Lawyers have really listened to me. I felt confident my case was handled well. The law has changed recently, and I did not feel that a previous law practice I spoke to was suitably up-to-date.
P.B., Carindale

We had such a positive experience with Michael Lynch Family Lawyers, and we highly recommend their services. Meticulous attention to detail, attended quickly to every additional request we made, and made sure we always knew exactly where we were every step of the way. Our lawyer took what was such a stressful and emotional time for our family, and made the process feel so smooth and seamless.

N.B., Brisbane
My family lawyer was very helpful in assisting me to combat a very ugly situation without stooping to the low levels that the other solicitor attempted to take us.
M.J., Manly
I appreciate my lawyer’s professional approach and her being on top of my situation.
N.S., Mt Gravatt

Thank you Debra for all the work you did for me, you both made the process manageable and brought sense to the chaos.

R.B., Toowong