An insight into what spouses need to know after the case of MK v SK (2026)
How are Company Assets treated when parties divorce?
Under section 25(2)(a) of the Matrimonial Causes Act 1973, the court must consider each party’s “income, earning capacity, property and other financial resources” when reviewing the financial resources, the parties have available to them, before deciding how the matrimonial assets should be divided between them. In certain circumstances, this may include company and trust assets.
However, a company is generally treated as a separate legal entity, meaning its assets belong to the company rather than to its shareholders personally. There is a concept known as the corporate veil, which creates a legal separation between a company and those who own or control the company. This in essence would prevent the assets being included in the matrimonial pot since the individual does not own the company assets.
Nevertheless, the Financial Remedy Court has taken two approaches to ensure company assets are included in the matrimonial pot, in an attempt to reach a fair remedy for both parties:
- In rare cases, the court may pierce the corporate veil by disregarding the separate legal personality and treating the assets as belonging to the individual shareholder.
- Conversely, as the case below shows, the court may instead take a practical approach by considering whether the party can access the financial benefit of those assets without needing to pierce the corporate veil.
What Happened in MK v SK [2026] EWFC 28?
In MK v SK, the parties were involved in financial remedy proceedings. The husband, a former CEO of an international technology company, claimed to have very limited assets, while the wife argued that he had hidden wealth in complex corporate and trust structures.
The husband had co-founded a company, referred to as the ‘Group’, in 1998 and held a 50% shareholding. The parties had enjoyed a very high standard of living, including luxury international travel, high-end dining, equestrian expenses and multiple rented properties. Despite this, the husband maintained that he had no legal or beneficial interest in the trusts, that the Group had no available funds, and that he was not receiving a salary but instead drawing down a $10 million loan.
The court considered the following factors when deciding whether the company and trust assets should be included in the matrimonial pot:
- The husband controlled distributions from the assets.
- He used the funds to support an affluent personal lifestyle.
- The court found it implausible that he had worked 80 hours a week without remuneration, an employment contract, bonuses or a salary.
- It was also unlikely that he had permanently given up his 50% interest in the Group.
Given these factors and the extent of the husband’s non-disclosure, the court drew adverse inferences against him. It concluded that the husband had access to undisclosed assets worth several million pounds and that the proposed award was fair. The wife was awarded a circa £2 million lump sum as part of her remedy and the husband was ordered to indemnify her in respect of a loan by him to the wife’s business.
What is the key takeaway?
MK v SK shows that complex corporate and trust structures will not necessarily protect assets in divorce proceedings. The Financial Remedy Court can look beyond formal ownership and treat company or trust assets as resources available to the parties for sharing. The key question as to whether the company assets are included in the matrimonial pot is not simply who legally owns the asset, but whether the individual has access to its financial benefit.
To reduce the risk of company assets being treated as personal resources, parties with complex corporate structures should:
- Maintain clear remuneration structures and dividend rights
- Keep business and personal finances separate and avoid informal withdrawals from the company for personal use
- Prepare a pre-nuptial agreement
This case also flagged the importance of being transparent in proceedings to prevent an adverse inference being drawn by the court against the non-disclosing party. There have also been subsequent calls for the use of anonymisation of judgments to be dispensed with in cases involving significant non-disclosure so that it is clear to all who has failed to comply with the duty to provide full and frank financial disclosure within matrimonial proceedings.
If you have any queries regarding divorce and your business assets, pre-nuptial agreements, or any other aspect of family law, please contact our Family & Matrimonial Team who would be happy to assist.
