FAMILY BREAKDOWN: FORMALITIES WHERE YOUR PARTNER WAS INVOLVED IN YOUR BUSINESS
Where a couple have built up a business together, it is important not to forget to untangle the business association when the relationship itself has come to an end. There may be many links, but some of the more frequently found ones include:
- Where the individuals were in a partnership, either formally set up with a partnership agreement or just completing partnership accounts and making tax returns in connection with the business. The partnership may be dissolved, or may continue in the name of one of the parties (there may be a technical dissolution), and in any event HM Customs and Excise and other third parties need to be notified.
- Where there is a limited company, usually a private company, in which the individuals may own shares or may also be officers (directors or company secretary).
- If there is a shareholders’ agreement, there is probably provision for the transfer of shares in these circumstances. If not, then the Articles of the company may provide a means of resolving any conflicts.
- Officers need to resign or be removed, and there will probably need to be formal arrangements such as a board meeting or general meeting, with appropriate prior notice.
The changes need to be entered in the statutory books of the company and may need to be registered at Companies House.
- The business may have had to secure lending from a third party (e.g. a bank or other investor), and the lending may have to be renegotiated, particularly if it was secured on the family home or by personal guarantee.
- One party may technically be the employer of the other, and in that case, there should be a formal termination of the employment with a compromise agreement to confirm the termination, on fair terms.
- Until the dissolution of the business links, don’t forget to provide for aspects such as tax liabilities, and “perks” such as company car, private health insurance.
