Settlement of business share after divorce

In our previous article Marriage and business: how to protect assets from BSM risks, we explained how the court settlement of the community of property (CoP) takes place when the former spouses are unable to reach an agreement.

However, one of the most discussed issues in practice is the share in a limited liability company (SRO) and its settlement in the time after the divorce.

Does the business share belong to the BSM?

If the business share was acquired during the marriage from the spouses’ joint funds, it becomes part of the community property.

This also follows from the case law of the courts, namely that a business share acquired during the marriage from joint funds constitutes an asset which is settled within the BSM.

However, it is important to distinguish between two levels:

• Commercial law – only the spouse who has made the deposit and is registered in the commercial register is a partner.
• Equity (BSM) – the value of the business share may belong to the community property.

Thus, spouses do not become “collective partners”. Only one of them is a partner. The other, however, has a proprietary interest.

What does the court order the business share or its property value?

This is a fundamental question in the context of the BSM settlement. According to settled case-law, the court does not award the value of the business share, but the business share itself, exclusively to the spouse who is a partner.

That means:

• a business share cannot be “split”,
• cannot be commanded to one who is not a partner,
• the other spouse is generally entitled to a financial settlement.

In practice, it looks like:

• the share remains with the entrepreneurial spouse,
• the other is awarded a compensatory share corresponding to his share of the value (usually 1/2).

How is the value of a business share determined?

A common mistake on the part of spouses is that they assume that the value of the business share is the amount of the company’s contribution.

Determining the value of a business interest is a much more complex issue. If a company has a share capital of €10,000 and one spouse has contributed €5,000, this does not mean that the value of the share is €5,000.

In determining the value of the share, the following shall apply:

• from the status of the share on the date of the dissolution of the matrimonial property regime (i.e. on the date of the final divorce decree),
• but from its normal (market) price at the time of settlement.

This means that if the company has grown in the meantime, the value of the share may be many times higher than the original contribution.

How is the value ascertained in practice?

Determining the value of a business interest is a technical question. The court will normally order expert evidence.

Expert:

1. examine the company’s accounting records,

2. determine the net assets of the company (assets minus liabilities),

3. determines the value of the business share according to the share of net assets,

4. take into account other economic factors (profitability, business prospects, indebtedness).

It is therefore the real economic value of the company, not a formal accounting entry.

If the resulting value is negative (e.g. the company is heavily indebted), there is nothing to balance.

What if it is one spouse’s business?

The business as such is not part of the BSM. It belongs to the separate property of the entrepreneur’s spouse.

Here it is necessary to distinguish between:

• a business interest in an SRO, and
• the business of a natural person, i.e. an entrepreneur (e.g. a self-employed person).

The settlement must take into account that:

• the joint funds of the spouses were used for the business,
• the proceeds of the business belonged to the BSM,
• a business can have both assets and liabilities.

According to case-law, the entrepreneurial spouse is obliged to compensate the BSM for the positive difference between the assets and liabilities of the business on the date of dissolution of the BSM. As in the case of a business share, expert evidence is almost indispensable.

At Highgate Estate Vault, we approach business holdings strategically – not just as a legal issue, but as a matter of protecting the value you’ve built.

We will help you:

• analyse whether the share belongs to the BSM,
• prepare a procedural strategy in court proceedings,
• set the settlement to be economically sustainable,

or preemptively set up asset protection before a dispute arises.

Book a consultation and get a tailor-made solution to protect your assets.