Understanding your rights and obligations if you work for or hold a directorship in
your spouse’s company is crucial during separation and divorce.
Nichola Bright, a partner in the Family Law Team at Myerson Solicitors (pictured) has this guidance:
I work for my spouse’s company – what are my rights on separation?
As an employee of your spouse’s company, you may have employment rights regardless of marital status. If you have been employed for at least two years, you may have protections against unfair dismissal.
It is essential to seek legal advice promptly to safeguard your position and income, before the divorce is finalised. Your spouse cannot terminate your employment because of the divorce. If you have been forced out because of the divorce, you may have a constructive dismissal claim.
I am a director of my spouse’s company but have no role in the business
If you are a director without an active role in the company, you still have responsibilities under the Companies Act 2006. Seeking legal advice early ensures compliance with your duties and safeguards against potential liabilities arising from decisions made without your involvement. Reviewing company decisions made during your absence from active participation is crucial to ensure they were properly executed.
Can my spouse terminate me as a director of their company during our divorce?
Depending on their shareholding, your spouse may have the right to terminate your directorship legally. Understanding the procedures for the lawful removal of a director is essential. Unreasonable termination could lead to claims such as unfair prejudice. Early legal advice is vital to protect your interests.
I am a shareholder of my spouse’s company. Can my spouse remove me now that we are separated?
As a shareholder in your spouse’s company, you will need to consider the implications of remaining a shareholder after divorce. Reviewing the company’s articles of association is crucial to understanding how shares can be transferred or sold.
If you have not been involved in running the company, it may be sensible for you to step away from the company, or it may be agreed that you will remain a shareholder, but without voting rights.
Tax consideration must be given to any intended transfer or sale of shares on divorce. Whether it is appropriate to remain as a shareholder will depend on the circumstances of your case.
Can I receive shares in my spouse’s company if I’m not a shareholder?
The Family Court can order the transfer of shares during divorce proceedings, depending on your specific circumstances and the business’s future viability. Considerations include the rights attached to transferred shares, such as voting rights and entitlement to income from dividends.
We are divorcing but wish to remain in business
Deciding to continue business together post-divorce involves assessing risks and implementing legal protections. Amending company documents, like articles of association and shareholder agreements, is critical to clarify roles, decision-making processes, and safeguards against deadlock situations. Ensuring formalised entitlements through directors’ service contracts protects your employment rights.
Choosing to remain in business together after divorce requires comprehensive legal advice to protect both parties’ interests and mitigate potential conflicts that could impact business operations.
Speak to the Family Lawyers at Myerson Solicitors for more guidance.
