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Family court documents laid out on table

Separation and The Family Business

One of the many great things about Alberta is the entrepreneurial spirit that drives us forward. This is a place where deals can still get done on the back of a napkin (buyer beware!!!) and where someone with an idea can realize that in a way that supports their family and the community. For many families, a corporation is like a third member of the marriage. Parties dedicate time, resources, and energy to building a business and it can be painful and confusing when the personal relationship behind the company breaks down.

In an ideal world, it would be easy to value shareholdings, it would be clear which spouse should and will take the business into the future, there would be enough money and assets to make an easy transaction available to separate the business interests along with the other family assets. Sadly, the situation is seldom that straightforward.

Instead, there can be confusion over roles, lack of transparency in business operations, claims of exceedingly good or exceedingly bad operations. We often lean on our accounting colleagues to help us with the valuation piece when a family business is part of a family. Once we have a number to work with, however, the job is often far from over. How does that valuation on a piece of paper become an actual dollar and cents resolution?

In the last few years, our courts have started looking at both traditional and non-traditional corporate law resolutions in family law cases. We are seeking our courts to recognize that the obligations between spouses that arise from family law are of the same importance as obligations that arise between stakeholders in corporate law. We have also seen the lifting or piercing of the corporate veil (that almost sacred division between shareholder and corporation) to give meaning to valuations. Lastly, we have courts considering shareholder oppression claims and remedies when one spouse is either not a shareholder or not a controlling shareholder in a family business. 

These areas are evolving and exciting. At Moe Hannah, we keep up to date on the latest cases and developments. We also cultivate important relationships with corporate solicitors and barristers who can help our clients when we need more expertise. 

Princess Diana famously said, “…there were three of us in this marriage, so it was a bit crowded.” We all assumed she was talking about infidelity, but maybe she was talking about “the Firm” too and the complications of having a corporate entity at the center of a family.