Failure to Obtain the Written Consent of the other Spouse

This material is an opinion of COLLEGIA Law Firm team as to risks and consequences arising from failure to obtain the written consent of the other spouse during sale and purchase of shares in the authorized capital of a limited liability company. Please familiarize yourselves with this information.

Movables and immovables (including money and securities), other possessions, including ownership rights established by civil legislation[1], are recognized as property. A share in the authorized capital of a limited liability company is also property of an individual or legal entity.

Under applicable laws of the Republic of Belarus property acquired by the spouses during the course of marriage is deemed to be jointly owned property, except as otherwise specified in the agreement concluded between the spouses[2]. No matter to whom of the spouses the ownership right is conferred or by whom of them such property is acquired, it is deemed to be their joint property. The spouses have equal rights of possession, use and disposal of such property. Exception to this rule applies where a marriage contract concluded by and between the spouses provides for other provisions[3].

Disposal of jointly owned property is subject to consent of all the parties. Such consent is assumed to be obtained, no matter who of the parties entered into a transaction to dispose of such property. An exception is real estate for which disposal written consent of all parties to joint property is needed.[4] Each of the parties to join property is entitled to carry out transactions to dispose of joint property, unless otherwise provided for by the agreement between all the parties.

Thus, if one of the spouses sells a share in the authorized capital of a company, consent of the other spouse is deemed to be obtained, in whatever form such consent is given, unless otherwise established by a marriage contract concluded between the spouses. With that, a transaction involving disposal of joint property, which was entered into by one of the party to such joint property, can be recognized at the request of other parties as invalid for the reason that the contracting party had no necessary authority to do so, only in case it is proved that the other party to this transaction knew or must have known about the lack of such authority[5]. Which is to say that a transaction involving disposal of a share in the authorized capital of a company can be recognized by the other spouse, who didn’t give his/her consent to such disposal, as invalid unless and until all of the following conditions have been fulfilled:

1) the spouse, who entered into a transaction involving disposal of a share, had no authority to do so: if such authority is limited by a marriage contract concluded between the spouses and the contracting spouse violated the limits prescribed by this contract [6];

2) this transaction was concluded with a mala fide purchaser: a purchaser knew or must have known about the limits on disposal of property and about violation of such limits by the seller.

Unless and until all of the above mentioned conditions have been fulfilled, a transaction involving disposal of a share in the authorized capital of a company can be recognized by the court as invalid at the suit of the spouse (the person in whose interests the limits are set).

It is worth pointing out that when concluding an agreement for sale and purchase of shares in the authorized capital, a seller as a rule guarantees a buyer that such shares are free from any right and claim of a third party.

In our opinion, it is quite difficult to prove evidence of all necessary conditions in order to recognize such a transaction as invalid, taking into account guarantees of a seller set forth in an agreement for sale and purchase of shares in the authorized capital of a company. However, we recommend that you obtain written consent of your spouse when selling shares in the authorized capital of a company and/or specify in the respective shares sale and purchase agreement that spousal consent to disposal of joint property – shares in the authorized capital of a company has been obtained, in order to avoid a possibility that such a transaction is recognized as invalid.

For further information or explanation, please contact specialists of Collegia Law Firm.

Yuliya Ostreiko

Deputy Director for legal services, Certified Lawyer

ostreiko@collegia.by

The information contained in this publication is the property of COLLEGIA Law Firm. This material does not constitute advice or recommendation to anyone and is provided for information purposes only.




[1] Article 1 of the Law on prevention of corruption dated July 15 2015 № 305-З;

[2] Part 1 of Article 259 of the Civil Code of the Republic of Belarus (the Code as of 07.12.1998 №218-З (as amended on 26.08.2019));

[3] Article 23 of the Marriage and Family Code of the Republic of Belarus (the Code as of 09.07.1999 № 278-З (as amended on 01.02.2019));

[4] Part 2 of Article 256 of the Civil Code of the Republic of Belarus (the Code as of 07.12.1998 №218-З (as amended on 26.08.2019));

[5] Part 3 of Article 256 of the Civil Code of the Republic of Belarus (the Code as of 07.12.1998 №218-З (as amended on 26.08.2019));

[6] Article 175 of the Civil Code of the Republic of Belarus (the Code as of 07.12.1998 №218-З (as amended on 26.08.2019)).