In the framework of this article, we will consider the relationship between family and corporate law, in particular, we will examine the following legal issue: is the share of a participant in an LLC a joint property of spouses?

According to Article 26 of the Family Code of the Republic of Armenia, relations related to the common joint property of spouses are regulated by the Civil Code, as well as by the marriage contract concluded between the spouses.

According to Part 1 of Article 201 of the Civil Code of the Republic of Armenia, property acquired by spouses during marriage is their joint property, unless otherwise provided by law or by a contract concluded between them.

It is noteworthy that the legislation of the Republic of Armenia, unlike the legislation of the Russian Federation, does not disclose what the property acquired by spouses during marriage (common property of spouses) includes.

Thus, the Family Code of the Russian Federation stipulates that a share in the authorized capital of a commercial company acquired during marriage, regardless of whose name it is registered in, is the joint property of the spouses.

To understand whether, in the light of the legislative regulations of the Republic of Armenia, the share of one of the spouses in the company can be considered joint ownership or not, it is necessary to refer to the Law on Limited Liability Companies of the Republic of Armenia.

A limited liability company is an economic company by uniting shares, that is, a company in whose activities the degree of participation of a person is determined by the percentage of that person’s share in the total authorized capital. The number of votes of a company participant at the general meeting is determined by the number of shares held in the authorized capital. This follows from the interpretation of Article 35 of the Law on Limited Liability Companies of the Republic of Armenia.

According to Article 10 of the Law on Limited Liability Companies of the Republic of Armenia, the founding document of the company is the charter approved by its founders. Amendments made to the charter of the company are subject to state registration.

Registration of amendments to the charter of the company's participants is not an end in itself; in any case, when a new participant is involved in the company, this must be included in the charter. Regardless of the relationship between the company's participants or future participants, the right of the person acquiring the share arises only from the moment of making amendments to the charter and registering it.

Of key importance is that the company's charter is approved unanimously by the participants, which implies that changes to it, including changes in the composition of the participants, must be made by the general meeting.

According to the RA Law on Limited Liability Companies, there are restrictions in the case of alienation of a participant's share. The fate of the alienated share depends on the will of the LLC participants. The latter can, by charter, establish and prohibit the alienation of the share to third parties. In this case, the share is acquired by the company.

So, in the end can the share owned by one of the spouses in the company be considered joint property or not?

The RA Court of Cassation noted in its precedent decision EKD/ԵԿԴ/4634/02/16: “A share is the basis for the origin of corporate relations between a company and a company participant, through which the scope of mutual rights and obligations of the company and the company participant between each other is determined. However, according to the assessment of the Court of Cassation, in addition to being an object of a corporate nature, a share is also the basis for the emergence of other property (including property rights). In particular, a share entitles the participant to receive a part of the profit from the company's activities, to receive a share from the remaining property of the company in the event of its liquidation, and to receive its value in the event of the alienation of a share. The above gives the Court of Cassation grounds to conclude that a share includes both purely civil and corporate elements. Therefore, in order to assess the extent to which a share can be considered property acquired during the joint life of the spouses, it is necessary to separate these two key elements of the share. Thus, from a corporate perspective, a share cannot be considered common joint property, considering that a spouse cannot be considered a participant in the company by force of law without the consent of the other participants in the company and without fulfilling obligations to the company. Moreover, in the case of a contrary interpretation, the interests of not only the other participants in the company, but also the company's counterparties, who do not have complete information about the composition of the company's participants, are violated.

We believe that the Court of Cassation has effectively separated the company's property, that is, the share owned by the participant, and the benefits resulting from it, with this decision.

From the above-mentioned comments of the court, the following conclusion can be drawn: the income or property resulting from the participant's share will be considered joint property, but the right to dispose of the share is the property right of the participant's spouse only. The share of a participant in an LLC acquired during marriage is common joint property, but this applies only to the property component of the share. From the point of view of civil law, considering the share to be the common joint property of the spouses does not affect the right to participate in the management of the company.

Thus, summarizing the above analyses, it is necessary to emphasize that for the performance of actions of a generally corporate nature, such as attending the general meeting, participating in the discussion of agenda items and voting when making decisions, or deciding to leave the company, the consent of the spouse who is not a participant in the LLC is not essential, but when performing certain corporate functions, the clearly expressed consent of the spouse who is not a participant is important to the extent that there is management of the spouses' common joint property.