Division of a share in an LLC upon divorce and distribution of marital property.

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Kaploukh Victoria

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Ukraine / Kharkiv

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Publication date: 28.05.2024

In the case of the division of the property of the spouses, when one of the spouses is a member of a limited liability company (LLC) and contributed to its authorized capital the property acquired at the expense of joint funds of the spouses, the following must be taken into account.

1. Legal regime of joint property of spouses:
   • Pursuant to Article 60 of the Family Code of Ukraine, property acquired by spouses during marriage is their joint joint property, regardless of whose name it was purchased or which of the spouses contributed to the authorized capital of the LLC.
   •     
   Contribution to the authorized capital:
   • The property contributed to the authorized capital becomes the property of the LLC, and the spouses receive a share in the authorized capital. At the same time, a share in the authorized capital is considered joint joint property of the spouses, if the property was purchased with joint funds.
   •     
   Division of shares in the authorized capital:
   • When dividing the property of the spouses, the share in the authorized capital of the LLC is also subject to division as joint property. According to Article 69 of the Family Code of Ukraine, when dividing property, each of the spouses has the right to half of the property, unless otherwise stipulated by the marriage contract or court decision.
   
   The procedure for dividing the share:
   • If the share cannot be divided in kind, the spouses can agree on the payment of compensation to one of them or the court can determine another way of division, taking into account the interests of both parties.
   • The court can determine the procedure for the exercise of the rights of the participant of the LLC to both spouses or establish another procedure for the use and disposal of the share.
   
   Features of share disposal:
   • In accordance with Article 12 of the Law of Ukraine "On Limited and Additional Liability Companies", disposal of a share in the authorized capital (its alienation, pledge, etc.) is possible only in compliance with the norms established by the LLC charter, as well as taking into account the rights of other company participants.

When dividing common property, one of the spouses can claim payment of half of the market value of a share in a limited liability company (LLC), if this share was purchased at the expense of joint funds or property.

1. 1. Definition of common property:
   • According to Article 60 of the Family Code of Ukraine, the property acquired by spouses during marriage is their joint property. This includes an interest in an LLC purchased with joint funds or property.
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   2. The right to half the cost:
   • Each of the spouses has the right to half of the joint property. This means that one of the spouses can claim compensation for half of the market value of the share in the LLC when dividing the property.
   
   3. Assessment of the market value:
   • The market value of a share in an LLC is determined using an expert assessment. This may be necessary to accurately estimate the value of the share to be divided.
   
   4. Compensation in money:
   • If the share cannot be divided in kind or one of the spouses does not want to receive the share in management, the court can oblige the other spouse to pay half of its market value.
   
   5. Settlements and payments:
   • The payment can be made in cash, and the amount must correspond to half of the market value of the share in the LLC at the time of the property division.
   
   6. The procedure for dividing a share may include several stages, in particular:
   • Carrying out an expert assessment of the value of the share.
   • Setting the amount of compensation based on the assessment.
   • An agreement between the spouses or a court decision regarding the payment of compensation.