The Supreme Court explained how spouses should divide a share in an LLC: when compensation can be demanded instead of corporate rights

The Supreme Court, in the composition of the judges of the Second Judicial Panel of the Civil Cassation Court in case No. 759/8676/19, clarified the features of protecting the rights of one spouse in disputes regarding corporate rights acquired during marriage. The Civil Cassation Court concluded that in such legal relations, the proper way to protect rights is a demand for payment of half the value of the participant's share in the company, rather than a demand to recognize ownership rights to part of the corporate rights.

At the same time, the Supreme Court partially satisfied the cassation appeal of the plaintiff and changed the reasoning parts of the decisions of the previous instances. The court noted that the refusal of the claim is correct, but not for the reasons cited by the courts of first and appellate instances.

Circumstances of the case

A woman applied to the court demanding to divide the marital property, believing that the corporate rights acquired by her husband during the marriage are their joint marital property.

She requested to invalidate the agreement on the alienation of corporate rights, cancel the corresponding registration actions, and recognize the ownership right of each spouse to half of the disputed share.

The case was repeatedly considered by courts of different instances. Part of the claims regarding the agreement and registration actions was excluded from this proceeding, and during the new consideration, the subject of the dispute remained the division of marital property.

Decisions of lower courts

The court of first instance, which was agreed upon by the appellate court, denied the claim.

The courts reasoned that a share in the authorized capital of a limited liability company is not an object of joint marital property and therefore cannot be divided by recognizing each spouse's ownership right to the corresponding part of the corporate rights.

Position of the Supreme Court

The Supreme Court agreed with the outcome of the case but disagreed with the reasoning underlying the decisions of the previous instances.

The Civil Cassation Court reminded that property acquired during marriage is presumed to be joint marital property. At the same time, if one spouse contributes joint funds to the authorized capital of a company, the owner of these funds becomes the company itself, and the person who made the contribution acquires corporate rights as a participant of the company.

According to the Supreme Court's conclusion, the other spouse in such a situation does not acquire ownership rights to part of the corporate share. Instead, to protect their property interest, they have the right to demand payment of half the value of the share belonging to the other spouse.

The court also confirmed the legal conclusion of the Grand Chamber of the Supreme Court set out in the ruling dated April 10, 2024, in case No. 760/20948/16-c. According to this approach, when resolving such disputes, there is a presumption that the value of the share corresponds to the amount of the contribution to the authorized capital unless the party proves that its value has subsequently changed.

The Supreme Court emphasized that the plaintiff requested to recognize her ownership right to part of the corporate share and effectively divide this share between the spouses.

At the same time, she did not claim payment of half the value of the share belonging to her husband.

Therefore, the Civil Cassation Court concluded that the plaintiff chose an improper method of protecting her right. This circumstance became the basis for the refusal of the claim. At the same time, the Supreme Court did not establish the absence of the plaintiff's property interest in the assets acquired during the marriage but only stated that her claims did not correspond to the proper method of judicial protection.

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