31.07.2022
1781
Can a share in the authorized capital of a legal entity be the object of the division of the property of the spouses?
General rule: “Article 69 of the Civil Code of Ukraine entitles both spouses to the division of property belonging to them under the right of joint co-ownership. At the same time, it does not matter if they are divorced or not!”
The same norm clarifies that the property that the spouses “acquired” during the marriage is considered joint joint property, unless they “agreed” otherwise in the marriage contract, or if there is a direct instruction in the law regarding a different order of ownership.
Regarding the share in the authorized capital
Current legislation does not regulate the distribution of shares in the authorized capital between spouses. The answer to the question of whether a share in the authorized capital of a legal entity can be the object of the division of the property of the spouses is provided by the judicial practice of the Supreme Court!
The explanation is contained in the Resolution of the Supreme Court of Ukraine dated December 12, 2022 in case No. 369/9429/18!
Yes, this document tells us that the property of a spouse, a member of a business partnership, included in the authorized capital of a legal entity, even if it was purchased with the joint funds of the married couple, is the COMPANY’S PROPERTY.
The law gives spouses only the right of demand (mandatory right)!
In plain language, a husband or wife, in the event of a property distribution process, acquires the right to demand:
- compensation of half the “price” of a share in the property of a legal entity;
- half of the profit from the economic activity of the company.
The Resolution of the Supreme Court in this case also clearly outlines marital rights, prohibiting them from:
- To claim each other’s shares in the company.
- To take “half” of business activity from each other.
- Business partnership among themselves.
Preliminary conclusions!
“Court practice establishes the IMMUNITY, INTEGRITY and INDIVISIBILITY of a share in the authorized capital of a legal entity, and the law gives spouses the exclusive right to compensation of 0.5 of the total contribution value!”
Specifics in numbers: “A husband or wife who are not members of the company have the right to 50% of the value of the property or funds that they contributed to the formation of the company. At the same time, the determination of the amount is based on the recorded data on the size of the contribution to the statutory fund, which are indicated next to the name of each spouse in the State Register.
The realities of life in examples!
Example #1: “Conditionality of contribution”
The husband or wife contributed the smallest possible amount to the “monetary foundation of the company”, over the years of successful activity the “price” of the company increased, but according to the law, one of the spouses of that one who contributed little is still entitled to only 0.5 of the contributed asset.
Example #2: “Shell company”
One of the spouses, knowingly or not, contributes a significant amount of funds to the company, the market value of which was overestimated when it was created, but in fact, it exists fictitiously and operates only on paper and for a limited period.
Advice from lawyers
The procedure for dividing the property of the spouses, the object of which is a share in the authorized capital of a legal entity, must be legally prepared!
At the stage of preparation, the lawyer will tell you whether it is better to demand – “half of the cost of the registration fee” or “half of the income of the legal entity in the form of dividends.” The second method, by the way, is determined by many factors, such as the availability of a basis for their calculation, the purpose of profit, the actual balance after taxation, etc.
It is important to know:
- Even if everything is perfect and there is something to claim, either spouse has the right to claim only half of the dividends received by the other after the divorce, and the right to receive this half will be “active” as long as the company receives income.
- Its effectiveness depends 100% on the competent legal preparation of the procedure for the division of the property of the spouses, which belongs to them under the right of joint co-ownership. Simply put, will you get something or will you waste your time.
On April 10, 2024, the Grand Chamber of the Supreme Court in case No. 760/20948/16-с adopted a resolution that deviated from previous conclusions on this issue and drew attention to the fact that spouses can acquire ownership rights to half the value of the other spouse’s share in the authorized capital of a legal entity, which may differ from the size of the contribution to the authorized capital.
For the specialists of the Grandliga Attorney Association, the most difficult “property division” is a common legal problem that always has several solutions. We are always ready to provide legal assistance and contribute to effective resolution of the case!
