In the legal framework of the Republic of Serbia, property acquired during marriage is considered joint property of the spouses. This issue is important not only for the daily functioning of the marital community but also for the protection of the spouses’ rights in the event of divorce, inheritance, or other legal procedures.
However, as neither the Family Law nor the Companies Act contain provisions that classify a share in a company acquired through a joint contribution of the spouses as joint property, various solutions arise in practice. To understand how, and whether a share in a limited liability company (LLC) becomes joint property, it is necessary to consider relevant legal norms as well as specificities related to the property regime of assets acquired during marriage.
This text will address the legislative framework, existing solutions, practical problems, and possibilities for overcoming disagreements and inconsistencies in the future.
Legislative Framework
The Family Law clearly distinguishes between separate and joint property of spouses. According to Articles 168. – 171. of the mentioned law, joint property refers to assets acquired by the spouses through work during the marriage.
On the other hand, separate property refers to assets acquired by a spouse before marriage or during the marriage through division of joint property, inheritance, gifts, or other legal acts through which ownership rights are exclusively acquired.
It is undisputed that the spouses manage their joint property by mutual agreement, and the key issue in this context is the division of joint property or the determination of each spouse’s ownership share in the joint property, which can occur during or after marriage.
Meanwhile, the Companies Act defines the concept and method of acquiring shares in a company. It states that a member of a company acquires a share proportional to the value of their contribution to the company’s total capital, and the rights of a company member are proportional to their share in the company’s capital.
If we consider these provisions from the perspective of marriage, financial contributions made by one spouse as a founding capital for a company represent joint property, while the shares of the company become the company’s property. This suggests that the joint property of the spouses becomes the property of the company upon being invested in the company. However, the property of an individual that has become the property of the company gives that individual ownership and managerial rights over the company.
The key moment that answers whether a share in a company represents joint property of the spouses is whether the share in the company represents the property of the shareholder.
If we consider the concept of ownership, which is a right over property, and the property in question consists of all movable and immovable things over which a person has ownership rights, as well as all property rights, logic dictates that ownership and managerial rights over the company represent property of the shareholder.
Therefore, based on the very definition of a person’s property, we conclude that a share in a company is the property of the individual spouse who is registered as the shareholder.
To summarize, a share in a company represents the property of a person, for the purposes of this text, one of the spouses who is registered as the owner of the share, while according to the provisions of the Family Law, all property acquired during marriage is joint property unless one of the exceptions applies, which would place the property under the regime of separate property.
The correct conclusion, based on the analysis of the Family Law and the Companies Act, is that a joint founding contribution to a company gives the spouses a joint share in that company, meaning that a share in a limited liability company constitutes joint property of the spouses, provided the contribution originates from their joint property.
If the share is acquired during the marriage, the spouse registered in the business registry acquires the right at the moment of registration with the Agency for Business Registers, while the other spouse acquires the share by law (ex lege) upon the division and determination of joint property.
According to our interpretation, the spouse who is not registered as a company member has the right to a proportionate share of the company’s capital and all ownership and managerial rights based on this.
Practical Problems
After analyzing the situation, it becomes clear that what appears to be a simple and legally well-regulated matter presents a significant number of problems and inconsistencies.
Why is this the case? Namely, the Family Law does not contain a provision that explicitly classifies shares in a company as joint property. Formally, the owner of a share is the physical person, i.e., the spouse who is registered as the shareholder with the Agency for Business Registers. Therefore, the spouse not registered as a company member has a right to a proportionate share of the contribution to the company’s capital but not to the share acquired through that contribution.
The root of the problem lies in the provisions of the Companies Act and business law in general. Viewed in this way, the spouse not registered in the registry has no membership rights, and thus no ownership rights, which contradicts the provisions of the Family Law and the very purpose of the concept of joint property.
If we consider that the minimum founding contribution for a limited liability company is 100 dinars, while the actual assets or capital of the company can be much greater, we reach an absurd solution where the spouse not registered as the shareholder would be entitled to claim 50 dinars during the division of joint property, based on a contribution to a company with, possibly a multi-million annual turnover or income.
For this reason, it is necessary to view the legislative framework as a whole and, through extensive interpretation of individual provisions, as well as the coherence of these provisions, find a way to ensure the consistent application of the joint property regime.
Conclusion
A share in a limited liability company, as a form of property acquired during marriage, is subject to regulations that define joint property of spouses. Under the norms relating to marital relationships in the Republic of Serbia, property acquired during marriage is considered joint property, and a share in a limited liability company is no exception unless otherwise agreed upon. Spouses have the option to regulate property relations regarding existing and future assets through a marital agreement. However, outside of that, the author of this text sees no basis for treating a share in a limited liability company outside the framework of joint property.
Any doubts in practice could be resolved if the provisions of the Family Law and the Companies Act were aligned, particularly if both laws specifically defined a share in a company as joint property of the spouses and if the law provided for the presumption that both spouses rights are registered with the Agency for Business Registers (similar to the property registry for immovable property).
Given the large number of registered limited liability companies and the importance of the joint property regime for spouses, this issue should not be overlooked, and it remains to be seen whether the legislator will address the need for further regulation of this matter.
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