Dividing finances upon divorce can become even more complex where assets that look and feel personal are in fact owned by a company. This situation is becoming increasingly common, especially where one or both spouses are business owners, directors, or shareholders. From company cars and IT equipment to properties and even the family home, the line between personal and corporate ownership can become blurred. Sometimes this is deliberate, but in most cases it happens through habit.

The issues to be resolved are not simply about who uses the asset but who owns it, and how that ownership affects fairness between the parties when they divorce.

The starting point: what counts as a matrimonial asset?

As we’ve stated in other articles, the court’s primary objective is fairness, as guided by section 25 of the Matrimonial Causes Act 1973. Matrimonial assets generally include those built up during the marriage through joint or individual effort. However, where assets are held within a company, the court must distinguish between:

  • The company, as a separate legal entity, and
  • The individual spouse’s interest in that company (usually shares)

The court does not automatically treat company-owned assets as belonging to either spouse personally. Instead, it looks at the value of the spouse’s shareholding and, in some cases, the practical reality of how the company operates.

Common types of matrimonial assets held by a company

In practice, many businesses hold assets that are used, at least in part, for personal or family purposes. Examples include:

  • Vehicles: A director or employee spouse may use a vehicle owned or leased by the company for both business and personal use. While the car is not personally owned, it may still form part of that spouse’s overall financial benefit.
  • IT equipment and office assets: Laptops, phones, and other equipment are often owned by the company but used daily by one spouse. These are usually of relatively low value individually, but collectively they can still form part of the financial picture.
  • Property: More complex issues arise where property is held within a company. This may include:
  • A restaurant or retail premises with living accommodation above
  • A buy-to-let portfolio held through a limited company
  • Even in some cases, the former matrimonial home itself

Where a family lives in a property owned by a company, the distinction between personal and corporate use becomes particularly important.

  • Cash reserves and retained profits: A company may retain profits rather than distributing them as dividends. One spouse may argue that these funds should be treated as part of the matrimonial pot, while the other may contend they are required for business purposes.

Can the company reclaim its assets?

A key principle of corporation law is that a company has its own legal personality (the corporate veil). This means that, strictly speaking, assets owned by the company belong to the company—not to either spouse.

If, for example, a company car is used by one spouse, that use is typically governed by employment or director arrangements. Upon divorce, the company may be entitled to:

  • Require the return of the vehicle
  • Reassign it to another employee
  • Sell or otherwise deal with it in the ordinary course of business

The family court cannot simply transfer ownership of a company asset to a spouse and can only disregard the corporate veil in rare, specific circumstances, primarily where the company is being used as a device, sham, or cloak to evade legal obligations. As noted in the 2013 case of Prest v Petrodel Resources Ltd, piercing the veil is an exception reserved for cases where the company is abused to hide assets, rather than simply because it is controlled by one spouse.

What if one spouse wants to keep using the asset?

In many cases, the issue is not ownership but continued use. For instance, a spouse who has been using a company car or living in company-owned accommodation may wish to retain that arrangement.

Whether this is possible depends on several factors:

  • The terms of any employment or director agreement
  • The needs of the business
  • The relationship between the spouse and the company (particularly if the other spouse controls it)

If the company is controlled by the other spouse, the court may take a dim view of any attempt to withdraw benefits purely to disadvantage the non-owning spouse. However, the court will also be careful not to interfere unduly with legitimate business operations.

If the asset must be returned, is compensation available?

Where a spouse loses access to a company-owned asset as a result of divorce, the court will often address this through financial adjustment where possible.

For example:

  • If one spouse loses use of a company car, the court may take into account the cost of replacing that benefit privately.
  • If a spouse must vacate a company-owned property, the court may adjust the division of other assets to ensure suitable housing is available.

This reflects the court’s broader aim of achieving fairness. The loss of a benefit, even if not strictly owned, can still be relevant to a party’s financial needs.

What if a spouse argues the asset should not count at all?

It is not uncommon for a business-owning spouse to argue that company assets should be excluded entirely from the matrimonial pot on the basis that:

  • They belong to the company, not the individual
  • They are necessary for the operation of the business
  • They are not intended for personal use

While these arguments can carry weight, they are not decisive. The court will look beyond formal ownership to the economic reality.

For instance, if a company routinely provides personal benefits (such as vehicles or accommodation), these may be treated as part of the spouse’s overall financial resources. If assets are held within a company primarily to reduce tax or shield them from personal claims, the court may scrutinise the arrangement closely.

However, the court will not lightly pierce the corporate veil and will respect the company structure unless there is clear evidence it is being misused.

Could the company itself be required to make a payment?

In most cases, the company is not a party to the divorce proceedings and cannot be directly ordered to make payments to a spouse. However, there are indirect ways in which the company’s resources may become relevant:

  • Through the value of shares: If one spouse owns shares in the company, those shares may be valued and taken into account in the settlement. This may lead to a transfer of other assets to the non-owning spouse, or a lump sum payment reflecting the value of the business interest
  • Through dividend or salary decisions: If a spouse has control over the company, the court may consider their ability to extract income (e.g. via dividends or salary) when assessing maintenance or lump sum payments.
  • In rare cases, joinder of the company: In more complex situations, the company itself may be joined to the proceedings. This can occur where:
  • There are allegations of impropriety
  • Assets have been transferred to the company to defeat claims
  • The company’s involvement is necessary to achieve a fair outcome

Even then, the court will proceed cautiously.

When matrimonial assets are held by a company, the divorce process becomes a careful balancing act. The court must respect the legal separation between a company and its owners while also ensuring that neither spouse is unfairly disadvantaged by that structure. Each case will turn on its own facts, but one principle remains constant: the court will look beyond labels and legal structures to achieve a fair and workable result.