A property adjustment order under the family law acts can transfer shares in a private company from one spouse to the other. Whether it should is a different question, and in most trading company cases the answer is no, because an order that creates two hostile shareholders, or that collides with the rights of outside shareholders, converts a matrimonial dispute into a company law one.
The company law overlay
Private company constitutions and shareholder agreements commonly contain pre-emption provisions requiring shares to be offered to existing members before any transfer, consent requirements, and valuation mechanisms for internal sales. The family court's orders operate against this backdrop, and third-party shareholders who are strangers to the marriage cannot simply have their contractual rights overridden. Where outside shareholders exist, their agreements belong in evidence, and any settlement contemplating share movement should be tested against them before it is signed.
The alternatives that actually work
In practice, provision in company cases is usually delivered around the shareholding rather than through it: a lump sum funded by company distributions over a defined period, transfer of non-trading assets such as investment property held in or alongside the structure, enhanced pension provision through the company scheme, and maintenance reflecting true earnings. Where both spouses genuinely worked the business and both wish to continue, a negotiated division of the enterprise itself is occasionally the right answer, but it is a commercial transaction requiring corporate and specialist tax advice, executed alongside the family settlement rather than improvised within it.
The organising principle is simple: extract value for provision, preserve the machine that generates it. Settlements that respect that principle survive; settlements that ignore it produce second rounds of litigation.
This article is general information, not legal advice. For the full practice area, see Business and Company Interests in Divorce, or contact the practice to discuss a matter in confidence.