Background
This involved a marriage of 10 years. The parties were married in 2013. The wife commenced divorce proceedings in December 2018 after leaving the matrimonial home in February 2018 with her two children. The husband is appealing for his shares in Company A and B to be excluded in the matrimonial assets divided between the couple.
The husband owned two motor companies, Company A and Company B.
Company A
Company A was incorporated on 22 November 2002, and the husband was allocated one share. Within the same month, he was allocated another 99,999 shares. A further 50,000 shares were transferred to the husband in April 2005.
In June 2013, the husband requested a loan of $100,000 from his parents to buy out his business partner’s shares of 50,000. He then transfers one share to the wife without any consideration from her.
Due to the wife’s uncooperative behaviour, the husband transferred two shares to his father in June 2018 after the wife left the matrimonial home. The reason being another shareholder/director is required to help him to run the company’s business smoothly and to comply with statutory requirements, as the wife refuses to attend the Annual General Meeting (AGM), despite notices being sent to her.
Company B
Company B was incorporated on 9 September 2005, with the husband holding one share and the wife being the company director. The company is in the business of servicing vehicles and retailing spare parts. The other shareholders are Seh Huan Tong, the son of the landlord of the premises occupied by Company B and Company A. They hold 33 and 66 shares, respectively.
The wife was paid $2,800 monthly by each company. The husband mentioned that the wife did not work for either company but occasionally helped him with bank deposits and other minor tasks, such as sending him to work. However, the wife claimed that she was initially employed as the husband's personal assistant in 2008 and stopped in 2014 after the elder child was born in 2014. However, she continued receiving a salary from the companies until 2017, which she considered her cash allowance.
The husband had also exhibited an email from the wife dated 19 November 2015, where she acknowledged that she did nothing for the companies and added, "I didn't ask u for the money, u gave it to me willingly."
Findings
Company A was incorporated on 22 November 2002, before the parties’ marriage on 18 June 2013. Only the last tranche of 50,000 shares transferred in 2013 after their marriage could be considered a matrimonial asset. Therefore, only the remaining shares acquired by the husband before marriage may be regarded as matrimonial assets.
Similarly, Company B was incorporated before the marriage on 9 September 2005. In addition, there is no evidence to prove the wife’s contribution towards the business of either or both companies. Although the wife was made a director of both companies, she was not a working director and has not improved the business for both companies. In contrast, she was an uncooperative director, and the husband had to rope in his father as another director to enable the company to function.
Therefore, the court did not consider that the husband’s shares in either Company A or Company B were matrimonial assets to which the wife was entitled to any share.
Learning Point
The division of matrimonial assets may be complicated if a business is involved, especially when your spouse is made the director or employee of the company.
In addition, your contribution and behaviour towards the business may be taken into consideration in the division of matrimonial assets. For example, a spouse who contributed to the company's success, especially with time and labour, may be attributed a larger share of the business.
Pre or post-nuptial agreement can be considered to separate your business from divorce proceedings.
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This content is meant for information purposes or reference only and not is not to be relied upon as professional or legal advice. This content does not constitute either advice or an offer or an invitation to offer to acquire, dispose of, subscribe for, or underwrite any of the financial instruments described herein.
You should seek advice from an attorney or professional who will be able to provide you with the relevant advice before you make any decision.
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