Key points
This case in 30 seconds
- Situation
- The groom’s family had run a business for many years, and he already held shares in the company before the marriage. His parents wanted the share arrangements made clear in an agreement before the wedding.
- Approach
- We helped organise the information on the shares he held, and had the agreement state separately that the shares and any later increase in their value belong to him, while setting reasonable protection for his fiancée.
- Result
- The agreement set out that the shares and their increase in value belong to him, and set reasonable protection for her. That is what makes the agreement fair.
Three points for handling this well
- Get the information on the shares he holds in order, as the basis for the agreement.
- The agreement states that the company shares and any increase in their value belong to him.
- The agreement also sets reasonable protection for her.
Background
The groom’s family had run a business for some time, and he already held shares in the company before the marriage.
His parents took this seriously and wanted the share arrangements made clear in an agreement before the wedding.
The bride understood how much the family business meant to his family, but wanted the agreement to be fair to her too.
- They were not sure whether stating only that the shares belong to him would be enough
- They worried it would be unclear who is entitled to any later increase in the company’s value
- They did not know how the agreement could also protect her
They had looked at some templates themselves, but these only dealt with who owns the shares, and said nothing about increase in value or protection for her.
She wanted an agreement that protected his family’s business and also gave her peace of mind.
To do that, the first step is to get the information on his shares in order.
Why should the agreement set out the family company’s shares and protection?
In this case we chose to state the family company’s shares and their increase in value separately. The shares were an asset he held before the marriage, and unless any later increase in value is spelled out, it can easily lead to a dispute.
After the marriage, who owns a family company held before it?
Property, savings, investments and company shares held in each person’s own name before the marriage remain with the original owner after the marriage.
What is the difference between writing only “the company belongs to one spouse” and stating the shares and their increase in value separately?
| Only “the company belongs to one spouse” | Shares and increase in value stated separately | |
|---|---|---|
| Usual wording | His company belongs to him | The shares and their increase in value are stated to belong to a named person |
| Common omission | Does not make clear whether increase in value after the marriage is included | States how the increase in value is calculated |
| Risk | Likely to lead to a dispute | The agreement stands on firmer ground |
| Protection | Protects only one side | Also sets reasonable protection for her |
For a business held before the marriage or by the family, the agreement should state clearly who owns the shares and how any increase in value after the marriage is calculated.
A common omission is to say who owns the shares without saying whether increase in value after the marriage is included.
How will the agreement set out the shares and the protection?
The shares in the company that he holds on the day of signing, together with any increase in their value after the marriage, all belong to him; she agrees not to make any claim over that company.
An agreement stands on firm ground when it is fair, fully disclosed and entered into voluntarily by both.
In this case the approach was to state his shares and their increase in value separately, while setting reasonable protection for her.
For the rest of what an agreement should cover, see “Prenuptial agreement”. For a similar approach, see “A case where the property belongs to one spouse but the remortgage failed” or “A case where the other side objected to a self-signed agreement”.
Once the shares and the protection are spelled out, what remains is how each stage works in practice.
How we helped
From the first consultation until signing, the same dedicated consultant follows your case, and our help comes in three stages.
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Gathering details
From the first consultation
At the first consultation, the dedicated consultant learns about the current state of the family business and his parents’ thinking on the share arrangements.
We helped him organise the information on the company shares he held before the marriage, as the basis for the agreement.
With the information on the shares in order, the agreement has something to stand on.
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Drafting the agreement
Once everything is in order
We helped draft the terms of the agreement, stating that the company shares and any later increase in their value belong to him.
The terms also set out reasonable protection for her, so the agreement is fair to both.
With the shares and the protection each spelled out, the agreement stands on firm ground.
-
Signing stage
Before the wedding
We helped check the terms and arranged for both of them to sign before the wedding.
After signing, we reminded them to keep the signed original agreement safe.
With the shares and the protection spelled out, they could plan the wedding with peace of mind once the agreement was signed.
Throughout, the client could phone the dedicated consultant at any time, in Cantonese, Mandarin or English.
For every document, we first explain its contents and what needs following up.
We are a divorce consultancy. We help you organise information, prepare documents and understand the procedure. If your case needs legal advice or a representative in court, we will tell you honestly and help you make other arrangements.
With the three stages joined up, this was the outcome.
Outcome
The agreement stated that the shares and their increase in value belong to him, and set reasonable protection for her, which is what makes the agreement fair.
Because the share arrangements were spelled out in the agreement, there is a clear basis later for deciding who owns the shares and their increase in value.
For the two of them, the biggest difference was this: his shares and their increase in value belong to him, and she also has reasonable protection. It does not protect only one side.
Throughout, the dedicated consultant drafted the terms from the share information already gathered, and explained to the clients what each part means.
Without stating them separately, ownership of the shares and of their increase in value is harder to tell apart later.
The agreement is signed and his parents are reassured, which was what they cared about most from the start.
How does the procedure change if your situation is different?
The approach in this case reflects the fact that he held shares in the family company before the marriage. If your situation is different, the approach will change too.
One or two points still to agree: We first write down what has been agreed, then list the points not yet settled with the usual ways of handling them, so you have concrete proposals to discuss.
Also involves a property bought before the marriage: If a property bought before the marriage is also involved, the agreement is written a little differently. See “A case where a flat bought before the marriage is paid off together after it” to see how the down payment and mortgage payments are written.
Want to understand your own situation first: If your situation differs from this case, you can start with a free initial consultation to find out how it can be handled.
Three things you can do first in a similar situation
- Get the information on the company shares he holds in order.
- Discuss with your partner the protection for her in the agreement.
- Ask your dedicated consultant early how the agreement should spell this out.
FAQ
How will the agreement deal with shares in a family company?
The shares in the company that he holds on the day of signing, together with any increase in their value after the marriage, all belong to him; she agrees not to make any claim over that company.
Is it enough to write only “the company belongs to him”?
The usual wording is simply “his company belongs to him”.
If it says only “the company belongs to him”, whether increase in value after the marriage is included becomes a point of argument.
How can the agreement protect her as well?
An agreement stands on firm ground when it is fair, fully disclosed and entered into voluntarily by both.
It does not protect only one side.
How will the agreement spell out the protection for her?
As well as stating that his shares and their increase in value belong to him, the agreement can also set reasonable protection for her.
Do you give legal advice or represent clients in court?
We are divorce consultants. We help you gather information, prepare documents and understand the procedure.
If your case needs legal advice or court representation, we will tell you honestly and help you make other arrangements.
Illustrative case: this page is adapted from similar cases we have handled. The people and details have been changed, and it is not a record of an identifiable client.
Every case is different, and the time taken and the result will vary. This page is general information only. It is not legal advice and is not a promise about your case.
