Mpact Of Divorce On Incorporated Company And Its Legal Precautions

The divorce proceedings will lead to changes in existing property between the couple. For those huge majority shareholder couples under joint property systems, divorce means the division of common equity between the couple. If the equity is in an unstable state, it affects the prospects of the company and the interests of related public investors. First, part in the marriage law, introduction of the division of property and related laws, reveals the divorce proceedings will lead to changes in the beginning of the existing property between husband and wife, at least it will be in an unstable state in a a period of time. In part corporation, determine the significance of clarity on the company’s equity, thus built up a theoretical relevance between divorce and corporation. Based on the analysis of the links between the marriage law and the company law and study of relevant case appearing on the capital markets, we found out that there are mainly two aspects of the impacts of divorces on corporations. One aspect is the impact of divorce on companies listing, including the impact on companies domestic listing and the impact on companies overseas listing. Another aspect is the impact of a listed company share prices. The disclosure of major shareholders’divorce information could cause the steep drop of a company’s share price and affect the legality of the transactions of listed companies. The disclosure of false information could also cause the steep drop of a company’s stock price, etc. They all are ended up in unnecessary share prices drop. For this reason, to reduce the corporation and personal risks, we propose the following prevention measurements:1) rational use of special agreement,2) timely disclosure of "Equity Nominee Agreement",3) signing a prenuptial agreement,4) signing the "concerted action agreement" between shareholders.5) registering the common properties under the family names of both sides and so on. Taking these precautions can reduce the impact of divorce on personals and corporations involved.