News
September 14, 2026
A scenario that divorce attorneys are encountering with increasing frequency is one in which separating spouses also own and run a business together. The marriage may be ending, but the business still has employees to pay, customers to serve, contracts to honour and decisions to make, often while the relationship between its two owners has become increasingly difficult.
Where both spouses are directors, shareholders or members of the business, separating their personal and commercial relationships can become one of the more difficult aspects of the divorce.
The starting point is to recognise that the marriage and the business are not legally the same relationship.
Divorce does not automatically end the business relationship
A spouse can occupy several different legal positions at the same time. They may be a husband or wife, a shareholder in a company, a director, an employee, a creditor of the business or a member of a close corporation.
The commencement of divorce proceedings does not, by itself, remove a spouse as a director or shareholder, terminate a member's interest or transfer control of the business to the other spouse. Such positions are governed by their own legal frameworks.
This difference was considered in De Sousa v Technology Corporate Management (Pty) Ltd and Others, where the Gauteng High Court dealt with shares registered in the name of one former spouse following the dissolution of a marriage in community of property. The case illustrated the importance of distinguishing between an interest in shares for matrimonial property purposes and the rights attaching to registered shareholding in the company itself.
This distinction can become particularly important where one spouse believes that an entitlement arising from the marriage gives them an immediate right to control company assets or exercise corporate rights.
A company remains a separate legal entity. Its property belongs to the company, rather than directly to its shareholders. The value of the shares or other business interest may be relevant to the division of the matrimonial estate, but that does not mean that the company's bank account, vehicles, equipment or other assets simply become assets available for division between the spouses.
The business must still be governed
The practical difficulty arises when two people who can no longer agree at home must continue making decisions together at work.
A 50/50 business structure can become particularly vulnerable. One spouse may want to retain staff while the other wants to reduce costs. They may disagree over distributions, salaries, new contracts, borrowing or expenditure. One may seek access to financial records while the other controls the accounting systems or banking relationship.
There may also be disagreement over who is entitled to communicate with employees, clients and suppliers on behalf of the business. These issues should not be treated simply as extensions of the divorce dispute.
Directors continue to be subject to the Companies Act 71 of 2008 and their duties towards the company. Section 76 requires directors, amongst other things, to act in good faith, for a proper purpose and in the best interests of the company.
The breakdown of a marriage therefore does not give either director licence to use the company as leverage against the other.
Decisions to withhold information, divert opportunities, remove funds, exclude a co-director from management or enter transactions designed primarily to disadvantage a spouse may have company law consequences quite apart from anything occurring in the divorce proceedings.
When disagreement becomes deadlock
Not every disagreement between spouses amounts to a corporate deadlock. Where the conflict prevents the company from functioning properly, however, the Companies Act provides possible remedies.
Section 163 allows a shareholder or director to approach a court where conduct by the company or a related person is oppressive, unfairly prejudicial or unfairly disregards that person's interests. The court has broad powers to fashion appropriate relief.
The usefulness of this remedy in a genuine 50/50 deadlock was considered in Van der Watt v Schoeman and Others. The Court accepted that section 163 is not confined to protecting a minority shareholder and may also provide relief where directors or shareholders with equal power have reached a deadlock with no reasonable prospect of reconciliation.
Possible outcomes can include regulating how the company's affairs are conducted or, depending on the case, facilitating the purchase of one shareholder's interest.
Winding-up may also become relevant in serious cases. Section 81 of the Companies Act makes provision for circumstances in which director or shareholder deadlock has become sufficiently damaging to the company. A breakdown in the relationship alone does not necessarily justify bringing the business to an end, however. The effect of the deadlock on the company and the requirements of the legislation remain important.
For an existing close corporation, similar issues may arise between members. Sections 36 and 49 of the Close Corporations Act provide remedies dealing respectively with the cessation of membership in specified circumstances and conduct that is unfairly prejudicial, unjust or inequitable towards a member.
Who keeps the business?
For many divorcing business owners, this becomes the central commercial question.
The answer may depend on the matrimonial property regime, the ownership structure of the business, any shareholders' or association agreement, the contributions and loan accounts of the spouses and the value attributed to their respective interests.
In some cases, both spouses may continue as owners after the divorce. In others, one may purchase the other's interest, or the parties may agree that the business or their shares should be sold.
A reliable valuation can therefore become critical. The parties need to understand what is being valued, whether that is shares, a member's interest, loan accounts or another financial interest, and distinguish that value from the assets owned by the business itself.
The commercial realities also matter. A business may have substantial turnover but limited distributable value. It’s worth may depend heavily on one spouse's technical expertise, client relationships or personal involvement. Existing debt, tax exposure and contingent liabilities can materially affect what an apparently successful company is worth.
The solution therefore cannot always be reached by simply dividing a figure appearing in the most recent financial statements.
Protecting the business while the divorce proceeds
A divorce can take considerably longer to resolve than the business can afford to remain in uncertainty.
Early attention to the commercial relationship can help preserve value for both spouses. This may require clarity around banking authority, access to accounting information, payment approvals, remuneration, distributions, major expenditure and who may make operational decisions while the broader dispute is being resolved.
The company's Memorandum of Incorporation, shareholders' agreement or a close corporation's association agreement should also be considered. Existing deadlock, transfer or dispute-resolution provisions may already provide a mechanism for dealing with some of these questions.
Where no workable framework exists, the parties may need to negotiate interim arrangements or, in more serious circumstances, seek appropriate legal relief.
The objective should be to prevent the matrimonial dispute from unnecessarily damaging an asset in which both spouses may retain a substantial financial interest.
Divorce between business partners therefore requires more than a family law solution. Matrimonial property rights, company governance and the commercial future of the business need to be considered together.
Barnard's Family Law, Commercial and Litigation teams assist business owners in navigating these overlapping issues, including shareholder and member disputes, deadlock, business interests within divorce proceedings and the legal arrangements required to protect an operating business while a matrimonial dispute is resolved.
