Can I sell my business during a divorce in British Columbia?

In British Columbia, the main limit on selling a business during a divorce is a court order, not a statutory ban. Section 91(1) of the Family Law Act says that on a spouse’s application the Supreme Court must make an order restraining the other spouse from disposing of any property at issue under Part 5 or Part 6 (pension division) until or unless that spouse establishes that a claim under those Parts will not be defeated or adversely affected by the disposal. Family law in Canada is partly federal and partly provincial or territorial, according to the Department of Justice Canada. This page covers British Columbia only.

How the Act counts a business

Section 84(1) includes in family property the property owned by at least one spouse on the date of separation, subject to section 85. Section 84(2) says family property includes a share or interest in a corporation and an interest in a partnership, an association, an organization, a business or a venture. Excluded property under section 85 includes inheritances. Section 84(2)(g) brings in the amount by which the value of excluded property has increased since the later of the date the relationship began or the date the property was acquired, and under section 85(2) a spouse claiming that property is excluded is responsible for demonstrating it.

Restraint orders and the court rules

The restraint in section 91 can be sought early. Under Rule 7-1(3)(b) of the Supreme Court Family Rules, an application for an order under section 91 restraining the disposition of property at issue is one that a party may bring without first holding a judicial case conference. Rule 5-1(19) lets a party who receives a Form F8 financial statement disclosing business or corporate interests request, in writing, documents that might reasonably be required to verify the valuation of the interest or the disclosing party’s income.

Value, division and tax

Unless an agreement or order provides otherwise, and except for a division under Part 6, section 87 values family property at fair market value, as of the date of an agreement dividing it or of the hearing before the court on the division. Section 95 lets the court order an unequal division if equal division would be significantly unfair, and the factors it may weigh include a tax liability that may be incurred by a spouse as a result of a transfer or sale of property or an order.

Whether a particular sale is safe is for your lawyer. For a contrast with another province’s scheme, see how Ontario’s Family Law Act treats a sale before separating.