The right of the spouse of the participant LLC to share in the company

 “US Invest” LLC lawyer – Uladzislau Babitski

 Creating business companies, the founders usually (with the exception of open joint-stock companies) want to build a business with a   certain   “circle of persons”, which will not change without their consent.

 One of the problems that may affect the amount of members and the size of the authorized capital is the divorce of one of the participants.

 According to Art. 259 paragraph 1 of the Civil Code of the Republic of Belarus (hereinafter - the Civil Code), the property acquired by the spouses   during the marriage is the joint property of spouses, unless a different regime of this property is determined by an agreement   between them.

 In accordance with Art. 259 paragraph 31 of the Civil Code, when dividing the joint property of spouses, the spouse of a participant in   a limited liability company or an additional liability company has the right to apply to the court for recognition of his/her right to the part   of spouse’s share in the authorized share capital of the relevant company.

 If the court recognizes the spouse of a participant LLC (ALC) has the right to the part of his/her spouse’s share in the authorized capital of the relevant company, after obtaining other participants’ consent, he/she has the right to become company’s participant or demand payment of the part his/her spouse’s share in the authorized capital or issue asset in kind of the same value. At the same time, refusal to be included in the membership of the relevant company entails the obligation of this company to pay the value of the part of his spouse’s share due to him or issue asset in kind of the same value.

The determination of the value of a share in the authorized capital and its payment or issue asset in kind of the same value are carried out in the same order as the payment of the actual value of a share when the participant withdraws company or is expelled in the period provided for by the constituent documents of the company, but no later than 12 months from the date the spouse presents the corresponding requirements.

The Law “On Business Associations” does not provide for special rules related to the division of a share in the authorized capital after spouses divorced, if such a share in an LLC (ALC) was acquired during the period the participant was married.

Thus, the former spouse has the right to a part of his/her former spouse’s share after divorce, if such a share was acquired during the period of their marriage, unless otherwise specified in the marriage contract.

What a spouse can claim after divorce (related to a share in an LLC (ALC))?

A spouse after divorce, as a general rule, has the right to claim the recognition in court of his/her right to a share in a certain LLC (ALC).

It is possible to become a independent participant of this LLC (ALC) in the case of consent of all other participants of the company, including the former spouse.

In case the General Meeting refuses to accept a new participant to the LLC (ALC), the company is obliged to pay the former spouse the actual value of his/her spouse’s share within 12 months. The procedure of payment is the same as established when a participant withdraws from the LLC.

It is worth noting, former spouse, in case of refusal to accept him/her as a member of the company, does not claim profit from the LLC (ALC), which may occur during the period from filing a claim on the right to a share until the actual settlement with former spouse. It is different from the participant’s withdrawal or expulsion.

So, it is possible to avoid appearance of a new member without the consent of existing members of the Company, but there is a risk of unplanned property payments (For example, members of the company did not plan to pay profits for 5 years and planned to use the money for company’s development).

How to protect yourself and other participants from wasting time and money in advance?

- To include in the company's charter, for example, that the company does not accept the spouse, the former spouse of one of the participants, without the decision of the participants’ General Meeting, approved unanimously.

This will allow not to waste time on disputes over proving each other general conclusions from the legislation.

- To avoid disputes on the share, the spouses can conclude a marriage contract in advance, this contract will contain the condition that the share in a company is the personal property of the spouse, and not common. In this case, divorce will not affect the affairs of the company.