Roles and rules at core of business

It is very common for married couples or partners who are cohabitating to run a business together.

The business may operate as a partnership between the couple or it may be a company where both parties in the couple are directors or company secretaries of the company.

Under the Companies Act 2014, the obligation for private limited companies now is to have one director and a company secretary.

If there is only one director, the director and company secretary cannot be the same person. However, if there are two directors in the company, one of the directors can be the company secretary.

The position pre-2014 was that you had to have two directors and accordingly, it was common if a company was being set up that spouses or partners would be made either a company director or company secretary. This would continue to be the position with the requirements that you have to have a separate company secretary to a director.

It should be noted that being a director of a company does not constitute ownership of a company and the shareholders would be separate and if a spouse or partner has been made a director or a company secretary, they will not necessarily have ownership or shares in the company or business.

The law in relation to Family Law and divorce in Ireland is predominantly contained in the Judicial Separation and Family Law Reform Act 1989, The Family Law Act 1995 and the Family Law (Divorce) Act 1996 and the Family Law Act 2019.

Previous to the 2019 Act, spouses had to be living apart four of the previous five years in order to qualify for a divorce. This was amended in the 2019 Act and the period is now reduced to two of the previous three years.

Spouses living in the same dwelling as one another shall be considered as living apart from one another if the court is satisfied that whilst living in the same dwelling they do not live together as a couple in an intimate and committed relationship. The 2019 act has significant repercussions for Family Law in Ireland.

As the period has been reduced it will become increasingly common that couples will proceed straight for a divorce rather than initially looking for a separation while awaiting to qualify for the divorce which was largely the position after Divorce was first introduced in Ireland in 1996.

Under Irish Law, the court has a number of powers to potentially transfer or sell assets under Judicial Separation and Divorce. This is known as a Property Adjustment Order.

Divorce law in Ireland states the court must ensure that proper provision is made for both parties and the children

Normally — in family law matters — both parties are obliged to file with the court a document that is known as an Affidavit of Means which sets out all of their assets, liabilities and income and the court makes provision based upon the means of the parties as well as upon their circumstances.

The law in Ireland is that the court must ensure that proper provision is made for both parties and the children. In order for “Proper Provision” to be made for a spouse or children, the court may need to make a number of orders including a Property Adjustment Order.

A typical example of this is that the court may order that a family home is transferred to the spouse who obtains custody of the children while the children remain dependent. A dependent child is one who is under the age of 18 or 23 if in full-time education.

Before considering making a Property Adjustment Order, the court will consider a number of factors such as:

• Succession rights may need to be considered and as to whether the dependent children are interested in assets being transferred to them. For example a child may wish to become involved in a family business or take over a family farm.
• As to whether the parties have contributed to acquiring the assets such as contributing to mortgage payments. This would be very pertinent in respect of a business and the court would certainly give consideration as to whether the parties have contributed to the development of a business and as to whether assets of the business should be considered when the court is making the appropriate orders.
• The value of the assets is significant and the court would have to consider as to whether it is feasible to order the sale of the asset. It may not be practical to sell, transfer or subdivide an asset for various reasons as it may affect the viability of a business or one of the parties' livelihoods.
• The court will also consider if there is a family business with assets attached to it as to what both parties contributed to the running of this and as to whether their incomes are primarily dependent on this.

Overall, the court has a discretion as to what appropriate orders to make and the court will make proper provision for the parties which can include the following:

• A Property Adjustment Order.
• An Order that maintenance has to be paid in respect of the children or spousal maintenance.
• An Order that a lump sum payment has to be made to one of the parties.

In respect of a business, the court is likely to consider that it may not be practical for both parties to continue running a business together and may order that the business assets are transferred to one of the parties in the event that the other party is adequately provided for.

An example of this is that the family home or other assets may be fully transferred to one spouse and the other spouse could then continue to retain ownership of the business. If there is a family business and the marriage breaks down, we certainly recommend that you take advice from a solicitor given the potential complexity involved here.

For family law matters, it is always advisable for the parties’ respective legal teams to try and negotiate terms of settlement satisfactory to both parties rather than proceeding to a hearing if possible.

Stephen Coppinger is a solicitor practicing in Walsh & Partners, Solicitors, 17, South Mall, Cork.