9
Sep
Protecting the Family Businesses From Marital Breakdown
While nobody likes to think about the consequences of a failed marriage before walking down the aisle, the risks faced by shareholders in a family business can be high. After all, without the proper protection mechanisms in place, a divorcing spouse could be entitled to half their partner's shares in the family business or half the monetary value.
Through a combination of corporate and family law, family business owners can take legal steps that will keep the shares in the company and prevent any of the value leaving if a marriage in the family breaks down. The first step is to ensure appropriate provisions are included in the family business shareholders' agreement. The shareholders' agreement can contain provisions preventing a shareholder from selling shares outside the family. This clause could be important if one of the owners needs to generate funds to settle a divorce claim.
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