Division of business by spouses

Friday July 14th, 2017

Before dividing the property, the spouses must correctly determine the amount of property that belongs to them on the right of joint joint ownership, separating personal property, because it is the objects of joint joint ownership that are subject to division.

As the case law shows, the fact of extending the regime of joint joint ownership to property must be proved in court each time through the prism of the following arguments:

  • time of acquisition of property,
  • source of funds for the acquisition of property,
  • the purpose of acquiring property.

Accordingly, it is not enough to indicate that the property was acquired during the marriage, but it is necessary to provide evidence that would indicate the joint participation of each spouse in the acquisition of property both through joint funds and through joint work.

The contribution to the statutory fund of the company is not the object of joint joint ownership of the husband and wife. Because such a contribution (contribution) from the moment of its transfer to the company becomes its property. The consent of the other spouse is also not required to dispose of a share in the authorized capital.

However, it should be noted that if the contribution to the authorized capital of the company is made at the expense of joint funds of the spouses, as well as in the interests of the family, then the second spouse may claim the division of income, payment of half the value of the property. So, as we see, the second spouse has the obligatory right which was transformed from real.

In accordance with paragraph 29 of the Resolution of the Plenum of the Supreme Court of Ukraine №11 of 21.12.2007 the property of a natural person-entrepreneur, as well as a private enterprise is not subject to the legal regime of joint joint ownership. That is, if one of the spouses engaged in business, entrepreneurial activity, acquired certain property as an entrepreneur, then such property is not included in the total mass of property to be divided, as the latter acquires the status of personal property.

However, the Constitutional Court in its decision of 19.09.2012. drew the opposite conclusion, according to which the authorized capital and property of a private enterprise, formed at the expense of the joint funds of the spouses, are the object of the right of joint joint ownership and, accordingly, are subject to division.

Judicial practice does not show the unity of the legal position on this issue: the courts in such situations recognize the property of a natural person-entrepreneur as personal and joint joint property. However, the prevailing position is that the property of a private entrepreneur is not a joint joint property, which in my opinion is correct, given the following.

An individual entrepreneur is liable for his obligations with all his property, including: personal property and the share of property that will belong to him in the division of joint property. If one of the spouses, acting as an entrepreneur, has acquired property used in the course of entrepreneurial activity, then such property should be considered as personal property, and the other spouse can only claim a share of the income from such activity.

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