I am heading toward a final hearing in July. My husband has offered deficient disclosure for the 3rd time and a further Directions hearing before FH looks likely.
He has disclosed that he is 25% director and partner of a company and has disclosed ''unaudited financial statements'' for 2011. I know the company is successful and suspect they are not accurate or complete. What can I do?
Can I ask for audited accounts? Can I contact the company''s accountants (as my ex has suggested I do as he said he can''t afford to contact them himself)?
If they are full unaudited accounts rather than the abreviated accounts (you only have to file abreviated accounts at company house) then there is really no merit in having audited accounts.
Audited accounts only become necessary when the turnover of the company exceeds a certain level (sorry don''t know what it is but you could check that out on the net).
The cost of having audited accounts is high and your husband needs to make sure that he keeps proper accounts. Your husbands firms accountants is also liable in law and accountants do not get involved in colluding with their clients. The profit and loss accounts will show what the position of the company is.
The court will be able to see from that what his financial position is.
If you are worried about him suddenly existing on minimal dividends when previously he was taking wages or some other consideration talk this out with your legal team.
Audited accounts will be a waste of time and costs and you are unlikely to get a court to order them and if you do it will wrack up costs so think very carefully about that.
Also he won''t be a 25% director/partner, he may be a 25% shareholder and a director or it may be that the company is a LLP.
If he is a 25% shareholder of a company then if it is a small company it may be that there are three other shareholders and directors (are you one of them - has he gifted you 25% share for tax reasons?)
Thank you for your answer, really helpful. I wasn''t sure of the cost of audited accounts, didn''t realise they were so expensive and maybe not necessary!
He is 25% shareholder and director with 3 other men. I''m not a director.
It says on the accounts given that the total assets less current liabilities: just under 1.5 m. Shareholders funds: 70,000. Is the shareholders funds the amount I need to work with?
I don''t understand accounts at all!!! Perhaps I need an accountant to have a look for me!
£70,000 shareholder funds may sound like a lot but usually the shareholder funds bear no relationship to the funds held in the bank account, the liabilities of the company (which include employees and directors remuneration, liabilities to creditors such as suppliers, the inland revenue and the vat man).
What is relevant is that limited companies are individuals in their own right in law. A limited company issues its own shares and has a lien on them and usually they are issued as £1 nominal shares which it sounds like is the case in your husbands part of the company.
What is important is that your husband and his other directors can continue to trade and earn a living out of the company.
In the past family lawyers have often stated that the shareholders funds are part of marital assets in divorce.
However if you attempt to claim your husbands part of the shareholders fund then he will have to withdraw from the business and in any case the other directors have an obligation to act independently and competently and always in the best interest of the company, its articles of association and memorandums and always in accordance with the purpose of the company.
If the purpose of the company is to do a certain type of business and also to provide a reasonable income for the directors and any employees it is not reasonable to state that the income derived from the trading is a marital asset along with the capital held in the capital accounts.
Accounting income and then capital is in fact double accounting.
My advice to you would be to be satisfied that he is reasonable about the money he is earning and then to look at any pensions you have together and any marital assets by way of house, other savings and marital debts.
Maggie posted recently a great article about how precedents are set where a divorce got into the commercial division and was put in front of a commercial judge.
The way forward is to preserve assets and debts as far as possible. If your husband were employed by a company of which he wasn''t a shareholder or director you wouldn''t expect the court to order that he doubled his income and then expect his employer to comply as it simply is not within the courts jurisdiction to do this.
If you can talk to your husband and try to avoid too many unnecessary solicitors costs.
If you want a good and unbiased opinion on finances I would recommend that you spend the money on an appointment with an Independent Financial Adviser.
A long long time ago in a previous "life" I used to be a IFA. Since retiring from that position I then set up three businesses myself, one Limited company, one partnership and one sole trading company. I have also been a governor at various schools, a trustee, an appointed guardian and a nominee.
I think maybe that those are some of the reasons why my divorce has gone on for 4 years and is now in 4 different branches of UK Courts.
You need someone to give you good advice about financial/commercial law and how you can help both your husband and yourself to survive divorce.
Thank you for such a comprehensive answer! It has helped me with so many unanswered questions!! Also can see your point about his need to carry on trading etc being in everyone''s best interests.