A new ruling by Britain’s highest court has stated that wealthy individuals will no longer be able to use offshore companies to shield their assets from their former spouses in the event of a UK divorce.
The Supreme Court ruled that a divorced husband, Michael Prest, must transfer to his former wife, Yasmin Prest, properties held by three offshore companies owned and controlled by him, as part of a GBP17.5 million divorce settlement.
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In the ruling, the court noted that there were some instances under English law in which a court may, "in very limited circumstance pierce the corporate veil".
But in this case, it happened by the fact that the properties at the centre of the case were being held by the husband’s companies, in trust for him, were accordingly "property to which he was entitled".
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By GlobalDataPartner in Farrer & Co, Jeremy Posnansky QC, who represented Yasmin, said: "The judgments in the case were not only important for matrimonial law "but also for company law and entrepreneurs", and called it "the most authoritative review and refinement of the law about piercing the corporate veil since 1897".
In terms of matrimonial law, the decision was also key, as it meant that "manipulative spouses can’t evade their responsibilities by artificially using a corporate structure to protect their assets in the event of a divorce," he added.
Case filed in 2011
Yasmin Prest, who married Michael Prest in October 1993, filed a claim in 2011 for a financial order, following the couple’s divorce earlier that year.
Both Prests had a dual Nigerian and British nationality.
The case was known as Prest v Petrodel Resources Limited and others, because the husband was not a party, but the judge ultimately found a number of companies belonging to the Petrodel Group are to be owned and controlled by the husband.
