Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

Employment law

Divorce courts

by Personnel Today 2 Nov 2005
by Personnel Today 2 Nov 2005

W ith around 40% of all marriages in the UK ending in divorce, employers need to be aware that it is not just the family home and joint bank balance that can be split between husband and wife. Following several landmark court cases, reaching back as far as 2001, it has become clear that shareholdings are treated in the same way as other matrimonial assets and businesses can be severely damaged by divorce.

Earlier this year, Mark Dixon of Regus Group had to raise 28.7m by selling nearly 3% of his shares in the company to fund a divorce settlement. In 2004, Stephen Marks was forced to sell some of his shares in French Connection, reducing his shareholding to 42% and subsequently relinquishing his controlling interest in the high street chain. David Harding, chief executive of William Hill, had to sell almost his entire stake in the bookmakers (5.2m worth of shares) to raise funds for his settlement.

What few HR managers, financial directors or company shareholders realise is that a husband or wife’s shareholding in any company, either public or limited, is an asset which will be taken into account on divorce. It can, in certain circumstances, even be ‘up for grabs’. The fact that the matrimonial court can force a divorcing shareholder to transfer all, or part of their shareholding to their spouse, comes as an unwelcome shock in many boardrooms. The court can, effectively, force the sale of a company or shareholding to fund a divorce settlement, particularly in the case of a ‘clean break’.

The potential impact of a divorcing shareholder in a publicly quoted company may be less than in a private trading company where a value will have to be attributed to the shareholding. In a case in 2001, Mr Justice Coleridge said: “I think that it must now be taken that those old taboos against selling the goose that lays the golden egg have been largely laid to rest… nowadays the goose may well have to go to market for sale.”
The process can, however, be extremely costly and was described by family lawyer Nick Mostyn QC as being “devoid of any science and never more than a guess by an expert”.

Perhaps a fairer solution would be for both husband and wife to retain a mixture of assets. Unfortunately this is not always a viable option due to third party interests, particularly from other shareholders. In the event that shareholders are willing to co-operate with the divorcing shareholder, solutions include: buying out the spouse’s shareholding, raising funds, or funding the settlement by way of a bonus, loan, dividend or buy back. However, all of the above methods will have tax consequences and create substantial administration challenges for the company.

Ultimately, prevention is better than cure and couples should consider entering into a prenuptial agreement in relation to business assets.

Susan Apthorp is a partner and Hero Hodgkinson an associate at KSB Law

Action points for HR



  • HR managers, financial directors and board members should seek legal and independent financial advice to ensure the company is protected. This is particularly important during share transactions and the addition of new shareholders to the company
  • Ascertain the marital position of significant shareholders prior to advising a company or shareholder on anything significant. This is also important when considering a prospective employee looking for a substantial holding or share options as part of their remuneration package
  • Identify whether any shareholders have gifted the beneficial interest of any shares. Although shares may not have been transferred into someone else’s name, they may be held in trust for another person and you should identify this
  • Give careful consideration to the inclusion of buyout clauses in shareholders’ agreements, as well as removing or imposing restrictions on share transfers, which, in turn, may prevent shares being transferred to a spouse
  • Aim to have a transparent, flexible company structure – this will provide shareholders with some certainty and ensure shares can be sold easily within the company or elsewhere.




Personnel Today
Personnel Today

Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

previous post
Royal Mail loses head of diversity and inclusion
next post
Basic skills triumph for one million adults

You may also like

Legal expert calls new holiday pay regulations ‘incoherent’

30 Nov 2023

Cruise giant accused of planning ‘fire and rehire’...

24 Nov 2023

Burges Salmon takes home 2023 Employment Law Firm...

21 Nov 2023

McDonald’s: How can employers prevent sexual harassment?

21 Nov 2023

Tesco equal pay test cases to move to...

17 Nov 2023

Minimum service levels: Work notices guidance published

16 Nov 2023

McDonald’s dismisses 18 staff following sexual harassment claims

14 Nov 2023

Unions accuse government of minimum service levels ‘red...

14 Nov 2023

UN watchdog urges action to prevent another P&O...

10 Nov 2023

Process of enshrining EU-derived worker protections into UK...

7 Nov 2023

  • How to spot and tackle imposter syndrome in the workplace PROMOTED | Half of all UK adults...Read more
  • BetterMe for Business: How to Build Wellness Culture at Work PROMOTED | Ever encountered a...Read more
  • Global growth with simple HR compliance (webinar) WEBINAR | In an increasingly global marketplace...Read more
  • Talent acquisition: How AI can complement a ‘back to basics’ approach PROMOTED | Artificial intelligence is now...Read more
  • What will it mean to be an HR professional in 2024? (webinar) WEBINAR | As we approach 2024...Read more
  • HR Budget Planning for 2024: Preparing your People Strategy PROMOTED | As organisations continue to adapt...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2023

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2023 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+