Smuggling assets during divorce

You have received a divorce claim and you have questions regarding the smuggling of assets of a company Ltd.

In the current era when divorce occurs at an alarming rate it is important to make sure that during the divorce one of the spouses does not flee his assets, including his rights in the companies he/she owns. Sometimes a spouse encounters a problem in which his or her spouse, begins to prepare the ground for divorce and he or she begins to behave differently with the companies he or she owns. The spouse has to file lawsuits in family court.

In the event that the spouse who actually owns the company’s shares, and in fact the company is under his full control, and in order to empty the company of its essence, he decides to stop working for the company in order to damage it. In the mysteries of his mind he intends to set up another company the day after the divorce and is therefore not bothered that the current company will slowly collapse. In such a case, a property claim must be urgently filed, in which an application must be submitted for the appointment of an accompanying manager whose role will be to manage the company as long as the shareholder does not manage the company in a manner that suits its good.

The role of the accompanying manager is to manage all matters of the business together with the owner of the company and thus take care of the interests of the company that will continue to exist and generate more profits. In many cases where such a request is made, a specific hearing is held and the court warns the shareholder to continue to manage the company and to look after its interests, as appointing an accompanying manager will result in multiple expenses for the parties..

The balanced compromise is of course to reach a divorce agreement without having unnecessary wars, including submitting an application for the appointment of an accompanying manager who will only drag the parties into unnecessary expenses. In a divorce agreement it is desirable to stipulate that if the spouse who is not the actual owner of the company and wants to receive half of the shares (in practice) then a number of provisions will be set to protect him from the other shareholders in the company and any change in the company management which will be determined in the divorce agreement and apply to the company regulations. The amended company’s Articles of Association is then transferred to the Registrar of Companies, thus creating a framework that obliges all shareholders to act in accordance with the Articles of Association.

Rules can be set to protect the spouse who receives his/her share of the company’s shares

1. In the first stage, the spouse must be formally registered as a shareholder in the company and fill in appropriate forms at the Registrar of Companies.

2. Establish new rules in the Articles of Association that will include the duties and rights of the spouse who has now received his shares. It is also recommended to stipulate in the Articles of Association the signature rights of the spouse in the company’s bank accounts.

3. It can be determined that any decision related to the withdrawal of funds from the company will require the spouse’ signature.

4. It is possible to determine who will be responsible for the salaries in the company, including those of both spouses, as well as to determine a salary ceiling.

5. A mechanism for withdrawing dividends from the company should be established and a situation should be avoided in which multiple expenses were incurred in order to prevent the distribution of dividends to shareholders and then a situation may arise where the spouse does not receive dividends on false pretense that there are no distributable profits due to certain expenses made such as managing fee.

6. It should be stipulated that the shareholders will not be able to employ family members and thus money smuggling can be prevented through ostensible employees who are family members or new spouses.

In conclusion, it is recommended that in the management of the divorce proceedings all the important parameters of managing the spouses’ assets and including the companies they own will be examined and build a divorce agreement detailing the distribution of assets that will be proper and serving both spouses.

Share

Share on facebook
Share on twitter
Share on linkedin

Read More

Domestic Violence

Do you have questions and concerns about domestic violence? The Family Court has issued a restraining order under the Domestic Violence Prevention Act When a

Read More »