Matrimonial Separation - How is a business shareholding valued?

54and56

Hi all,

I'm undertaking a study project looking at the valuation of various assets in different situations and I'm stumped as to what the protocol is for valuing a business or a shareholding in a business (assume a Limited company) in matrimonial separation proceedings and in particular whether minority discounts should be applied.

I've been looking for Irish case law guidance without success and would appreciate any input from the users of this forum.

FYI I have reviewed the JUDICIAL SEPARATION AND FAMILY LAW REFORM ACT 1989 and the FAMILY LAW ACT 1995 but can't see any reference to this specific topic. There is reference to "Market Value" but only as it applies to land. I can't see any reference to the valuation of businesses or business shareholdings so I'm looking for same via Irish case law/precedents. They must exist but for the life of me I can't find them. I've searched http://www.ucc.ie/law/irlii/index.php, http://www.bailii.org/databases.html#ie and the Law Gazette etc. If anyone here has access to or knows the key sources of guidance on this topic I'd really appreciate it.

In conducting my research I've been able to find lot's of UK case law guidance relating to the topic including whether a Quasi Partnership exists (in which case discounts should not be applied) and in the US Revenue Ruling 59-60, which has been around for over 40 years, established a framework which has stood the test of time when it comes to the fundamental principles of valuing a privately held business, for divorce or any other purpose which was later supplemented with The Model Business Corporation Act that prohibits the “minority discount” being used in divorce proceedings.

I know this is a very niche topic but it has piqued my interest and I'd really like to get an understanding of how the issue is dealt with here in Ireland. It's bizarre that I can find out more about how the process works in the UK and USA than I can in my own country!! Perhaps that's because martial separation and divorce are relatively new concepts in Irish law?

All replies and input greatly appreciated.

Peregrinus

Je_suis_Jean wrote: »

. . . I know this is a very niche topic but it has piqued my interest and I'd really like to get an understanding of how the issue is dealt with here in Ireland. It's bizarre that I can find out more about how the process works in the UK and USA than I can in my own country!! Perhaps that's because martial separation and divorce are relatively new concepts in Irish law?

We've had divorce for twenty years or so, and separation for considerably longer. I think it's more down to the fact that we're a relatively small jurisdiction, so there's a smaller volume of case law. Plus, most of the cases are in the Circuit Court, and don't get reported. Plus, it's generally in the interests of both parties to agree (with their respective advisers) the value of the assets in play; where cases are disputed and appealed and you get reported judgments it's very rare that the issue is dispute is the value to be attributed to a particular asset.

54and56

Peregrinus wrote: »

We've had divorce for twenty years or so, and separation for considerably longer. I think it's more down to the fact that we're a relatively small jurisdiction, so there's a smaller volume of case law. Plus, most of the cases are in the Circuit Court, and don't get reported. Plus, it's generally in the interests of both parties to agree (with their respective advisers) the value of the assets in play; where cases are disputed and appealed and you get reported judgments it's very rare that the issue is dispute is the value to be attributed to a particular asset.

Thanks Peregrinus, I take your point about the relatively short period of time divorce has been permitted in the Irish system and the fact that we are a small jurisdiction with a smaller volume of case law but the issue of dispute between the two parties valuation of a business or shareholding therein cannot be so rare that it has never occurred and never had to be adjudicated on. Even if there are only a handful of such cases I'd like to identify them to understand how the judge determined the issue and what previous cases, whether UK or otherwise, he/she used as precedents to help form his/her judgement. There has to be at least one somewhere that I should be able to find!!

54and56

So 120 views and only one contribution. This is a very active forum but I'm guessing the subject matter is just too niche to generate much discussion.

Mods, happy to close the thread if you want to tidy things up otherwise happy to leave it open in case someone with knowledge of the space (a family law specialist?) happens by and makes a contribution.