The ‘bitter reality’ of sharing marital property in a company
When it comes to a company, the doctrine of Separate Legal Personality (SLP) as espoused in the classical case of Salomon v Salomon & Co Ltd [1896] UKHL 1, [1897] AC 22, and the Ghanaian case of Morkor v Kuma [1998-99] SCGLR 620 and others, portends that it is a separate legal entity from the members that form it and that such persons are not directly liable for its debts or liabilities.
The 1992 Constitution of Ghana, guarantees a spouse’s entitlement to a reasonable provision of the estate of the other whether or not that spouse died having made a will.
For a spouse to thus realize this, Article 22(3) provides further that;
- spouses shall have equal access to property jointly acquired during marriage;
- assets that are jointly acquired during marriage shall be distributed equitably between the spouses upon dissolution of the marriage.
Additionally, Article 33(5) of the 1992 Constitution seals it by its provision that;
“The rights, duties, declarations, and guarantees relating to the fundamental human rights and freedoms specifically mentioned in this Chapter shall not be regarded as excluding others not specifically mentioned which are considered to be inherent in a democracy and intended to secure the freedom and dignity of man.”
However, when it comes to a company, the doctrine of Separate Legal Personality (SLP) as espoused in the classical case of Salomon v Salomon & Co Ltd [1896] UKHL 1, [1897] AC 22, and the Ghanaian case of Morkor v Kuma [1998-99] SCGLR 620 and others, portends that it is a separate legal entity from the members that form it and that such persons are not directly liable for its debts or liabilities as it is assumed that the company as a distinct legal entity, owes those liabilities.
Alternatively, it implies that while the shares in a company are the property of the shareholders, the assets are the property of the company and not its shareholders.
Courts in Ghana have on countless instances been confronted with and have had cause to resolve such issues where divorcing couples clamor for the sharing of properties acquired during the subsistence of their union but in the name of a limited liability company.
But in such matters,
‘the court’s hands are tied up by the provisions of the law regulating company shares and assets,’ according to a Retired Justice of the Supreme Court, Nene Amegatcher.
It is generally impossible for one to lay claim to a company’s assets unless they do so based on a transaction with the company itself.
A claim against a shareholder of the company therefore cannot translate into laying claims to the accounts of the company and assets of the company by any disputing spouse on the basis that the other holds shares in the said company.
Such an occurrence is indeed a conundrum that courts have always carefully resolved. Indeed, Justice (Rtd) Nene Amegatcher couldn’t have put it better in the case of Addo v Allotey J4/24/2022 when he described the situation as seeming ‘ammunition in the hands of smart spouses to deny the other spouse interest in such properties acquired in the name of limited liability companies.’
In addition to the above, Justice Gabriel Scott Pwamang had cause to briefly comment on this matter when he delivered the lead opinion in the case of Gilbert Anyetei v Sussana Anyetei. His Lordship noted on the concluding page that;
“If a company was established in the course of a marriage and it is proved that the spouse whose name does not appear as a shareholder nevertheless contributed to its establishment, in such a situation, it is the shares which would be assets jointly acquired during the marriage that may be shared between the parties and not the properties of the company.”
He added;
“Once the shares are distributed, we believe both spouses would then indirectly thereby gain proportionate interests in the properties of the company.”
It follows from the above that whenever a feuding spouse lays such a claim to properties acquired during the subsistence of their marriage but in the name of a company, the court is likely to decline because such assets belong to the company which is an artificial personality.
Rather it is the shares of the company that may be shared if proven that they were jointly acquired during the pendency of the marriage as espoused by their Lordships above.
As such in the case of Addo v Allotey J4/24/2022 which traveled from the High Court to the Supreme Court, the respondent’s claim for 50% shares in Stomet Company and Atlas Pharmacy Limited was held as unsustainable.
Similarly in the Gilbert Anyetei v Sussana Anyetei, even though such a claim did not arise, their Lordships held that to share a company’s assets in shares in the exceptional instance, it ought to be proven that the spouse who lays claim, contributed to the establishment of the company.
The Way Forward
To flatten this hurdle in the way of marital property challenge, Justice Nene Amegatcher offers some insightful propositions in the case of Addo v Allotey J4/24/2022 as follows;
He called on the Parliament of Ghana to pass the law regulating the property rights of spouses as enjoined by Article 22(2) of the 1992 Constitution.
“It is up to Parliament to gather the courage, comply with the constitutional edict, intervene, and cure the mischief by passing the law regulating property rights of spouses.”
Secondly, Amegatcher JSC in the same case, in his optimism, hoped that a
“latter-day family law giant will arise to tweak the English Supreme Court decision in Prest v Petrodel [2013]UKSC 34 into the Ghanaian marital property settlement context and put to rest a right which has dribbled the courts in this country for decades.”
Additionally, he averred that all hope is not lost because legal ingenuity on the part of counsel representing such feuding spouses could save the situation by making any such company a party to the divorce proceeding.
“Consideration should be had to Order 4 rules 1-4 of the High Court Civil Procedure Rules, 2003, C.I. 47 on joinder of parties and causes of action. Under this rule, the limited liability companies could be made parties to the divorce proceedings and reliefs made against it in the same way as an adulterer may be made co-correspondent or an intervener under Order 65 Rule 7.”
It is until these are done that, ‘reliefs endorsed in petitions and cross petitions by feuding spouses for the right to shares and assets held or acquired in the names of such companies,’ will not continually elude them.