Divorce for business owners — how to protect sensitive commercial or company information

7 March 2025

13 min read

A business owner reviews the company accounts

Many business owners may be concerned about requirements to divulge sensitive commercial or company information as part of the divorce process.

Here, Amy Harris from our family law team and Rachel Brassey from our corporate team explain exactly what information a business owner may be expected to share and what can be done to protect sensitive information.

Shareholder rights

While many small businesses may be run by one person who’s also a director and shareholder, it’s possible for their spouse to also be a shareholder. While their spouse may also be an employee, they may have little day-to-day involvement in the business.

Following separation, any shareholders in a business will want to understand more about their interest and the financial health of the company. While this disclosure can be requested as part of divorce or financial remedy proceedings, a shareholder is also entitled to request certain information about a company under the Companies Act and may be entitled to receive information pursuant to the company’s articles of association or any shareholders’ agreement.

A shareholder is also entitled to receive notice of general meetings and attend them, as well as receive a copy of any proposed written resolution. Typically, shareholders will also have the right to vote at any general meeting unless there are specific exceptions (such as the shareholder holding non-voting shares or shares that specify their holders are only entitled to vote in specific circumstances).

The Companies Act gives shareholders the right to ask to see a number of documents.

These include:

the company’s statutory register of members
the terms of directors’ service agreements
the terms of directors’ indemnity provisions
records of resolutions and minutes of general meetings.

Any shareholder has the right to inspect the company’s annual accounts and strategic report (if any), directors' report and auditor's report (if any). However, a shareholder who holds more than 10% of the shareholding is entitled to request that a limited company’s current year accounts are audited.

This can compel the director to provide this information and may help to identify further relevant information that may not be obvious from the company’s accounts.

Find out more about shareholder rights and disputes.

Form E & duty of disclosure

Disclosure is valuable upon divorce because it helps a couple to understand the other person’s finances (and other relevant circumstances) and enables them to take advice from a family lawyer as to what the appropriate settlement parameters are.

Whether disclosure is completed voluntarily as part of negotiations between solicitors, at mediation or another form of non-court dispute resolution or as part of financial remedy proceedings at court, it’s common for the court form — known as Form E — to be used. Form E is a lengthy document which serves as a useful proforma to gather personal and financial information about a person.

It’s important to remember that the form is being completed by the individual — not the company. It’ll therefore be completed by the director or shareholder in their personal capacity. A limited company is a separate legal entity and won’t usually be a party to a divorce.

What company information must be disclosed on divorce?

If you’re a company director or shareholder, the main aspects of Form E that’ll be relevant to your business interests are set out below.

Section 2.11 (Capital: Business assets and directorships) requires you to provide the basic details of the company, such as its name, the nature of the business and your role(s) in it.

The form asks you to comment on the company’s accounts, including whether they’re an accurate reflection of your interest in the business and your estimate of the current value of the business (taking tax into account).

It’s often difficult for those involved in a company to understand what the net valuation of the business may be. The company’s accountant or an external forensic accountant may be able to help with this. If the valuation of the business or your interest can’t be agreed, an expert valuation may be required.

In addition, 2.12 requires you to list any directorships you hold or have held in the last 12 months and sections 2.15 to 2.17 require income from all sources.

The level of document disclosure regarding a limited company and your income derived from it in Form E is fairly modest.

This comprises:

Copies of the business accounts for the last two financial years.
Any available documentation upon which you’ve based your estimate of the current value of your interest in this business (for example, a letter from an accountant or formal valuation).
Evidence of income (usually provided by payslips, P60 and tax return).

If you have a credit or debit on your directors’ loan account, this will also need to be disclosed at the relevant section of your Form E.

Company valuations

If the valuation of the business or your interest in the business can’t be agreed, further disclosure will be required and an expert forensic accountant may be jointly instructed by you and your ex-partner to prepare a report. However, in the event of a dispute, the court itself will determine what the company is worth based on the evidence. The report will commonly ask the expert to provide their view as to the net valuation of the business as well as its tax position and liquidity. The expert may also be asked to comment on the ability of the company/shareholders to raise cash to potentially pay the other party in respect of their interest.

An expert forensic accountant would usually request detailed information from the company director to assist with their valuation.

This may include:

Overview of trading history.
Practical day-to-day operational issues such as premises, number of employees and their roles.
Details of other shareholders and their roles (if any).
Any investment projects planned.
Future projected turnover/profit.
Cash flow statements and details of working capital.
Bank statements.
Details of borrowing or other commitments.
Details of any historic transactions or potential transactions (such as share disposals or the potential sale of the business).
Details and valuations of any assets owned by the company (such as addresses of any properties that the company may own).
Details of any agreements/contracts with third parties.
Details of creditors.
Whether there are any legal disputes or other contingent assets or liabilities unresolved.
Specific questions relating to the company’s performance, including year-to-year comparisons.
Whether there’s a shareholders’ agreement.
Retirement plans.

The specific information requested will depend on that particular company (such as its size and industry). There’s no set or specific disclosure that will be requested by the expert. The information will be wide ranging and comprise whatever information the expert considers necessary.

The court’s approach to company valuations

It’s recognised that the valuation of shares in private companies is among the “most fragile valuations which can be obtained” (as per Mr Justice Moylan’s comments in H v H i[2008] EWHC 935 (Fam)).

In the case of Versteegh,Lord Justice Lewison further added that such valuations can be difficult as there’s “no obvious market for a private company. Second, even where valuers use the same method of valuation they are likely to produce widely differing results. Third, the profitability of private companies may be volatile, such that a snap-shot valuation at a particular date may give an unfair picture. Fourth, the difference in quality between a value attributed to a private company on the basis of opinion evidence and a sum in hard cash is obvious. Fifth, the acid test of any valuation is exposure to the real market, which is simply not possible in the case of a private company where no one suggests that it should be sold”.

In the landmark case of Miller v Miller; McFarlane v McFarlane [2006] 2 AC 618 [26], Lord Nicholls said that "valuations are often a matter of opinion on which experts differ. A thorough investigation into these differences can be extremely expensive and of doubtful utility".

This highlights why the disclosure of all relevant information relating to a company is important — it’s for the court to make a determination of value based on the evidence available. The court has broad discretion and typically won’t undertake a forensic accounting exercise itself. However, to make a judgment, the court must have knowledge of all relevant issues that may affect value. This is confirmed by Mr Justice Moylan in H v H, who said that “The purpose of valuations, when required, is to assist the court in testing the fairness of the proposed outcome. It is not to ensure mathematical/accounting accuracy, which is invariably no more than a chimera” (paragraph [5])”.

Risks of non-disclosure

If the court orders that an expert should complete a report — and the expert states that they require certain pieces of information — the court can draw inferences from failure to non-disclose which may be damaging to your position. The other party to a divorce may also feel compelled to make an application to court to compel you to produce the information that the court has requested. If they’re successful, you may be ordered to pay their costs associated with the application.

In addition, financial orders can be set aside in the future as a result of non-disclosure. Your former partner could make an application to set aside an agreement if they say that you didn’t disclose a particular asset or relevant information regarding the value of an asset that renders the agreement reached unfair.

If, for example, an expert accountant wasn’t told about a key piece of information relating to a business that could render the valuation inaccurate, this could result in any agreement reached on that basis being set aside and you may face a costs penalty at court.

Furthermore, when providing disclosure to court, it should be accompanied by a statement of truth.

The cover sheet of Form E states:

“A failure to give full and accurate disclosure may result in any order the court makes being set aside.

If you are found to have been deliberately untruthful, criminal proceedings may be brought against you for fraud under the Fraud Act 2006.

The information given in this form must be confirmed by a statement of truth. Proceedings for contempt of court may be brought against a person who makes or causes to be made, a false statement in a document verified by a statement of truth.”

As well as civil sanctions such as costs orders, you may also face criminal sections. Therefore, honesty is always the best policy.

While you can reach an agreement without providing full disclosure, this is a big decision to make. You may wish to discuss the risks this brings with your solicitor. There’s also a risk that if you don’t provide disclosure voluntarily or an agreement can’t be reached, an application may be made to court by your ex-partner. If a court orders you to provide financial disclosure, you must comply or risk serious consequences.

Company joinder to proceedings

In some cases, it may be necessary for the court to join a limited company to financial remedy proceedings on divorce and become a third party or intervenor.

While it’s unusual for a third party to join such proceedings, it occurs most commonly when one person to the marriage or civil partnership alleges that the other person has a beneficial interest to property in the name of a third party and when a third party alleges rights over assets owned by one or more persons to the marriage or civil partnership.

For example, in the context of a company, this could arise where a family member says that they’re the actual beneficial owner of shares held in the name of one of the parties and this is disputed. The joinder of a third party to proceedings can result in the disclosure of further information regarding the business and its private arrangements.

What can I do to protect confidential and sensitive information on divorce?

There are limits as to what you can do to protect confidential and sensitive information as part of a divorce and it’s best to take legal advice as soon as possible if you have any concerns.

There’s a duty to provide full and frank disclosure upon divorce. Any failure to do so can carry significant risks. Anyone receiving financial or other personal information about their partner within divorce proceedings must keep that information confidential, otherwise they could face serious sanctions themselves.

Discussing confidential information obtained during financial remedy proceedings with a third party is likely to be unlawful. Furthermore, subject to the circumstances, it could result in an actionable breach of confidence, action in trespass to goods or criminal prosecution under the Data Protection Act 1998.

If your spouse is an employee, inappropriate dissemination of company information may also amount to a breach of their employment contract.

The advice in each case as to how to protect confidential and sensitive information on divorce will vary and it’s important to take comprehensive advice. In some circumstances, a form of non-disclosure agreement (NDA) might be advisable before or after separation.

In rare circumstances, following separation the company may also require independent legal advice in circumstances where the interests of you as a director/shareholder and your company may conflict.

Non-court dispute resolution

To protect information from the wider public, following separation, it may be advisable to consider forms of non-court dispute resolution such as negotiation between solicitors, mediation or arbitration.

There are moves towards increased transparency in the Family Court which mean that journalists can attend hearings. While the court may agree that certain aspects of the proceedings can’t be reported on, the safest option might be to avoid court altogether.

Planning ahead with prenups & legal advice

If you’re not yet married or in a civil partnership, you may wish to add a clause in any prenuptial agreement (prenup) to set the expectation at the start of your union that any company or other financial information received during the course of the marriage or civil partnership should be treated as confidential.

If you’re embarking on a new chapter in your life, it may also be prudent to take advice on company structure, articles of association and the need for a shareholder’s agreement or employment contract. This is particularly important if your spouse or civil partner is to have a role in the business.