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Digest of the Week | Shares in Private Corporations

Shares not included in division of net family property in recent Ontario Superior Court of Justice case

Tremblay v. Tremblay

2016 CarswellOnt 922

Ontario Superior Court of Justice

Family law --- Division of family property — Assets which may be excluded from property to be divided — Business and employment assets — Shares in private corporations — Ontario

Parties married in 1992 — In 1993, husband's father, M, hired husband for his electrical business, which was owned by holding company, M Inc. — In 2009, M implemented estate freeze, which involved corporate reorganization — M's desire was to restructure ownership of M Inc. to allow growth to accrue 50 percent to husband's family and 50 percent to M's family — As part of estate freeze, common shares of M Inc. were equally divided between family trust in husband's name, Trust 1, and family trust in M's name — Parties separated in 2012 — Wife sought division of net family property (NFP) pursuant to Family Law Act (FLA) — Wife sought to have common shares of M Inc. held by Trust 1 (subject shares) included in NFP and valued at $540,440 — Trial was held with respect to NFP and other issues — Subject shares not included in NFP — Subject shares did not have any value beyond their nominal face value — Husband did not have interest in M Inc. as defined by s. 4 of FLA — Funds in M Inc. were entirely under control of M — Evidence of this included that M controlled composition of board of directors, that no distribution of assets could be made without M's consent, and that monies making their way to M Inc. did not necessarily flow to common shares — While intention of estate freeze may have been to share profits equally as between husband and M, that was not what they actually did.

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