Q&As

What guidance is available for a forensic accountant valuation of shares in a limited company on divorce, in particular as to whether a minority discount should be applied?

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Produced in partnership with Chris Bryden of 4 King’s Bench Walk
Published on LexisPSL on 09/09/2020

The following Family Q&A produced in partnership with Chris Bryden of 4 King’s Bench Walk provides comprehensive and up to date legal information covering:

  • What guidance is available for a forensic accountant valuation of shares in a limited company on divorce, in particular as to whether a minority discount should be applied?

It is commonly the case that where, in financial remedy proceedings, one of the assets is an interest in a limited company, the court will direct a valuation of that interest. Sometimes it will be straightforward to calculate the value of a business, such as a one-person incorporated trading entity, where there is no intrinsic value to the company and a formal valuation is not required with the accounts providing the information necessary. However, for a larger business or one that involves multiple shareholders or a minority shareholding, it will usually be necessary for the court to appoint a forensic accountant to conduct a valuation. The application is made using the Family Procedure Rules 2010 (FPR 2010), SI 2010/2955, Pt 18 procedure and it is ordinarily necessary to include the details and CVs of suggested experts, to enable the court to make a determination. The findings of the expert will usually be determinative, and it is unusual for an expert to be called to give live oral evidence. The procedural provisions relating to experts are set out in FPR 2010, SI 2010/2955, Pt 25.

In D v D and B Ltd, Charles J considered a fairly complex corporate structure, where the husband was the sole shareholder of a holding company which owned or had interests in a number of other companies. Charles J referred to

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