'Corporate veil' cast aside as UK court rules on divorce settlement
UK court ruling that a spouse can lay claim to company assets in reaching a settlement is likely to have a significant impact in HK
A landmark ruling in Britain, in which the Supreme Court found that company assets held by a spouse can be handed over as part of settlement claims, is likely to affect divorce proceedings in Hong Kong.
Lawyers say the decision could make it harder for a spouse to hide personal assets by putting them behind a corporate structure - the "corporate veil".
On Wednesday, the seven-member court unanimously rejected claims by Michael Prest that he could not hand over properties controlled by his company to his former wife as part of a £17.5 million (HK$213 million) divorce settlement because he was tens of millions of pounds in debt.
He is the founder and controller of the Nigerian energy group Petrodel Resources, registered in the Isle of Man. The court ruled that the properties, initially represented as assets of the offshore company, were actually held in trust for the husband.
In the ruling, Lord Justice Sumption said Michael Prest had "deliberately sought to conceal [that the properties were held for him] in his evidence and failed to comply with court orders with particular regard to disclosing evidence … The court inferred that the reason for the companies' failure to co-operate was to protect the properties, which suggested that proper disclosure would reveal them to [be] beneficially owned by the husband".
In Hong Kong, Sharon Ser, a senior regional partner and head of Withers' Family Practice, Asia, said the decision had significant implications for Hong Kong.
"Traditionally, so many of us here acquire assets in company names and people even buy their own matrimonial homes in the name of a company," Ser said.