Business owners often have additional considerations, needs, and properties on separation. The business structure and nature of each spouse’s involvement will inform the interim and final issues that need to be solved.
Common concerns of business owners include maintaining operations during separation, minimizing the effects of their separation on the business, keeping their personal dispute private and confidential, and the division of business assets. They often have to resolve legal issues related to business valuation, indemnification, shareholder rights, directorship changes, confidentiality, and income determination.
Here are some common considerations and methods for business owners to more efficiently and effectively navigate their separation:
- Get legal advice on how businesses are valued and divided in divorce matters. Ask a lawyer your questions regarding continued operations after separation, decision making, and use of business assets.
- Choose a resolution process that will best meet your needs. If confidentiality is an important consideration, you may wish to use a private process like mediation or arbitration to ensure that your divorce details, company financials, and other information remain confidential.
- Inform yourself regarding the obligation for spouses to each fully disclose all relevant financial and other information relevant to the divorce. Although gathering and organizing disclosure can be onerous, the legal obligation should be taken seriously.
- Review the shareholder rights and directorship responsibilities held by you and your spouse. If necessary, proactively address your concerns regarding continued operations, use of business funds, and decision making after separation.
- Consider whether you would benefit from the assistance of a Chartered Business Valuator (“CBV”) to determine the value of the business, for the purposes of property division. Spouses may wish to jointly retain a CBV or each hire their own expert.
The continued operation and success of a business is often to the benefit of both spouses, in the long run. Unfortunately, in extreme circumstances, a spouse may need to seek a remedy to prevent the conduct of the other spouse from undermining operations or dissipating business assets. There are specific legal remedies that may be sought to help deal with the interruptive conduct of a spouse. These should be discussed with a lawyer.
We would happily discuss your specific business considerations and priorities with you in a Balbi Assessment.
– Written by Lily Rabinovitch