When a relationship ends, dividing property is rarely simple. When a business is involved, it can feel even more overwhelming. Many business owners are surprised to learn that company shares, money lent to the business, or increases in business value during the relationship may form part of the relationship property pool.
Understanding how businesses are treated on separation can help you make clear decisions, manage risk, and avoid disputes that drain time, energy, and money.
When are company shares relationship property?
It’s a common assumption that a business automatically “belong” to the person who runs it. In reality, company shares can be relationship property even where:
- only one partner is a shareholder; and
- the other partner has never worked in or been involved in the business.
As a general rule, shares acquired during the relationship are joint property, regardless of whose name they are in.
Even where shares were owned before the relationship began, the other partner may still be entitled to a share of any increase in value during the relationship. This can happen, for example, where:
- Effort during the relationship increased the value of the business, such as one partner working for little or no pay, or contributing time, skills, or expertise that helped the business grow; or
- Relationship property was invested into the business, such as money from a joint account being used to buy business assets or cover expenses, or one partner’s income being reinvested into the company instead of used for personal or household costs.
In these situations, the focus is on whether the relationship contributed to the business becoming more valuable.
How is a business valued?
Valuing a business is not always straightforward. The right approach depends on the type, size, and structure of the company.
Common valuation methods include:
- Capitalisation of earnings, which looks at the business’s ongoing profits and applies a multiplier based on risk and industry norms;
- Asset-based valuations, often used for holding companies or property-focused businesses; and
- Discounted cash flow models, which are more common for larger or more complex businesses and focus on expected future earnings.
Timing also matters. The law generally requires shares to be valued at an “up-to-date” point, often the date of hearing if a matter goes to Court. This can be many months, or even years, after separation.
That makes it important to carefully consider what happens in the business after a break-up, particularly where one partner continues running it and the other steps away.
It is common for each party to obtain independent accounting advice. Where valuations differ, the figure is usually resolved through negotiation, or if necessary, by the Court.
Shareholder current accounts: often overlooked, often important
A shareholder current account tracks money that shareholders have either:
- lent to the company; or
- taken out of the company over time.
They are like bank accounts and can be in credit (meaning the company owes the shareholder money) or in debit (meaning the shareholder owes the company the funds).
If a shareholder has lent money to the company, that loan can be relationship property, even if the shares themselves are treated as separate property.
Overlooking shareholder current accounts can significantly distort the true value of what is being divided.
Other issues to keep in mind
Business-related separations often raise additional considerations, including:
- Tax – transfers of shares, repayment of shareholder loans, or business restructuring can all have tax consequences. These should be considered early to avoid unintended outcomes.
- Contracting-out (prenup) agreements
A properly drafted agreement can change the default rules, but only if the agreement meets strict legal requirements, including having two lawyers involved – one for each of you.
- Information and transparency
Full and accurate financial disclosure is essential. Gaps in information can slow the process and increase costs.
Getting the right advice early
Separation involving a business is rarely just a legal issue. It often requires coordinated advice from family lawyers, accountants, and valuers to reach outcomes that are fair, practical, and workable for the future.
Getting advice early can help protect the ongoing operation of the business, clarify your position, and work towards a resolution that allows both parties to move forward with confidence.
If you are bringing a business into a new relationship, advice at the outset can also help you put the right protections in place and avoid surprises later down the track. Book a FREE CALL now.
Separation is hard enough without worrying about what happens to the business you’ve built.
If you own a business and are separating (or considering it), this one-hour consult is your starting point. We’ll explain how your business is treated under relationship property law, talk through your options, and help you understand what steps you can take to protect it.
You’ll leave with a clear, practical plan that supports the future of your business and gives you more certainty about what comes next — so you can move forward with confidence, not guesswork.
Starting something new is exciting. Making sure your business is protected helps keep it that way.
If you own a business and are entering a new relationship, a contracting-out agreement (prenup) can play a key role in protecting what you’ve built. In this one-hour consult, we’ll talk through how your business fits into the relationship property rules, your goals for the future, and the options available to you.
We’ll help create a clear plan that safeguards your business, reduces uncertainty, and feels fair and transparent for your partner — so you can move forward with confidence.
By Liana Yong
Liana is a Senior Relationship Property Lawyer at Clean Break, known for her pragmatic, resolution-focused approach to separation and complex property matters. She helps clients find clear, tailored solutions during challenging times.
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