Divorce, death, foreclosure: Why the Slovak “standard” of business ownership often does not stand up to reality

Slovak business is a challenge in itself. But an even greater risk arises when private wealth and business are “in the same purse”. Divorce of a partner, death, foreclosure or tax audit can turn an ordinary life situation into an existential problem for the company and vice versa. In this article, we summarize the most common weaknesses of the typical Slovak ownership structure and show why it makes sense to build protective “buffer zones and protect both corporate and private assets”.

Slovak standard: no shield between owner and operating company

In practice, we often see a structure where partners own operating companies directly as individuals. No holding company, no “buffer zone”, no rules and no protection from crisis scenarios.

This has two major consequences:

• Personal risks can spill over into the firm (e.g. foreclosure on a private debt → foreclosure on a business stake in the firm).
• The risks of the firm can spill over into the private sphere (e.g., statutory liability, liability, litigation, bankruptcy, and the potential impact of creditors on private assets).

Another evergreen is “everything under one ID number”: a healthy, profitable part of the business is tied to a risky project (a development project, a new venture, loan financing) or non-business-related assets are held in the same company (real estate, warehouses, buildings). The consequence? First, the potential exposure of the healthy part of the business and assets to the debts of the loss-making part of the business. Second, it tends to be both a procedural and tax complication when selling a business; the buyer often does not want the unrelated assets and “bringing them out” may not be tax neutral without further tax considerations and requires legal and tax creative solutions.

Divorce and BSM: Legal uncertainty and inconsistent court practice

The divorce of a partner is a typical “unexpected” situation and one of the most common. The Slovak regulation of the community of property of spouses (BSM) is outdated and was not designed for modern ownership of shares in companies.

The problem is not only the BSM settlement itself, but also its unpredictability: in the practice of the courts, there is not always a uniform approach to whether and how a business share (or the proceeds thereof) are taken into account in the division of property.

It is important to understand the difference:

• The non-property value of the share (rights of a partner – voting, control) remains with the spouse who is a partner (i.e. the court does not award the business share or part of it to the other spouse in such a way that he/she would become a partner).
• In principle, the value of the property and benefits (in particular dividends or the purchase price when a business share is sold during the marriage) belong to the BSM and are taken into account in the settlement of the BSM.

And what will surprise many entrepreneurs: narrowing the BSM only works for the future. What is already “in” the BSM cannot be excluded from the BSM, for example, by transferring or gifting it to only one spouse.

Death of a partner: succession proceedings can paralyse a firm

The succession of business shares sounds “administrative”. In reality, however, it can cause:

1. Splitting of ownership – the share gets to the heirs who do not want to continue with the company or do not understand the business.

2. Procedural paralysis – if the deceased was the sole managing director, with a not well functioning institute of the administrator of the inheritance, the inheritance proceedings lasting months or years can paralyse the decision-making and signing in the company.

3. Risks of managing the property of minor children – if the business share is inherited by minor children, it is managed by the legal representative (the other parent).

There are simple solutions that can partially reduce the risks of succession (wills, modifications to the articles of association, in some types of companies also the exclusion of the succession of a share with a right to a compensatory share, or option mechanisms between shareholders). The key is to set them upfront, not only when the “weather turns bad”.

Statutory liability and “fair weather”: legally pay out profits on time

Many owners rely on the phrase: “a shareholder is liable only to the extent of the outstanding deposit”. The reality is harsher, Slovak law knows several mechanisms that can lead to personal liability of the statutory or controlling person (shareholder) for the company’s debts.

A practical example from practice is the prohibition of return of deposit (in the broad sense): any performance for the benefit of a shareholder without adequate consideration can be a problem (e.g. non-market transfers of assets, interest-free loans, unclear consulting agreements, even private use of a company car without payment).

Another “underestimated” situation in practice is the payment of profits. Simplified:

• When a company is in a healthy financial position, profits can be paid out as standard,
• when the financial situation deteriorates, disbursements can be legally risky and statutory officers should be alert,
• when a company is at risk of insolvency, dividends should not be paid.

Holding as a “buffer zone”: non-tax reasons are often decisive

Holding is not just about taxes. In practice, it’s mainly about:

• creates a shield between the individual (owner and statutory officer) and the risks of the operating company,
• will allow rules to be set at one level for divorce, death, execution and departure of a shareholder that can be applied in relation to all assets owned by the holding company,
• reduce the risk of “contamination” between projects in the group, where individual projects are suspended under separate companies under the holding company,
• facilitate the separation of investment assets and private assets from potentially risky operations (private assets vs. business).

At Highgate Group, we make these setups legally defensible, tax-efficient, and work even when life’s unexpected situations arise.

If you are interested in the topic in more depth, we recommend you to check out the full conference proceedings.

If you are interested in how to set up your ownership structure to protect both your corporate and private assets in the event of unexpected life and business situations, we will be discussing this topic in detail at our Highgate Business Forum 2026 – Why and How to Stay in Slovakia conference: https://highgate.sk/konferencie/preco-ako-ostat-na-slovensku/

We are the Highgate Group, modern advisors for your law, tax and accounting under one roof.

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