Divorce and company assets - when can the corporate veil be pierced?

Prest (Appellant) v Petrodel Resources Limited & Others (Respondents) [2013] UKSC 34

Yasmin Prest, married to Nigerian oil tycoon Michael Prest, won her landmark divorce court ruling when the Supreme Court ordered the transfer of properties held by companies within the Petrodel Group to her as part of her divorce settlement.   The Petrodel Group is owned and controlled by Mr Prest.

The case, and its progression through the courts, has been widely reported due to its potential impact on company law and the well-established concept of the “corporate veil”. The Court did consider the type of circumstances which might give rise to the corporate veil being pierced. They found that it might be possible in matters of company impropriety but not merely to ensure justice between spouses.   The rationale behind the order transferring the properties to Mrs Prest was that, in fact, the companies were simply holding the properties on trust for Mr Prest, as the sole beneficial owner.  By making this ruling, the Court upheld the distinction between assets owned by a company (a separate legal entity) and assets held by a shareholding spouse.  The latter can be subject to a property transfer order in matrimonial proceedings but not the former as the assets of a company are not within the jurisdiction of the family courts.