The value of shareholdings: where the court declines to attribute a value to shareholdings

In this matter, the Court had regard to the specific circumstances of shareholdings being unable to be sold on the open market and the terms of the shareholders agreement. The judge’s decision in declining to attribute a value to the husband’s shareholdings – upheld on appeal – demonstrates the Court’s discretion in determining the value of items within the property pool.

When determining the property pool available for division, the primary judge concluded it was inappropriate to attribute a positive balance to the husband’s interest in [B] Pty Ltd. In doing so, the primary judge considered:

1. The husband held an interest in [B] Pty Ltd through his personal shareholdings and shareholdings owned through Trust F. The husband was a founder shareholder and director of [B] Pty Ltd.
2. The parties engaged an accountant and business valuation specialist, to prepare a report with respect to the value of the husband’s interest in [B] Pty Ltd. The wife sought for the Court to adopt the value which the accountant attributed a 'fair value' of $2,603,400 to the husband’s interests in [B] Pty Ltd.
3. The husband’s interest in [B] Pty Ltd was governed by a Shareholder’s Agreement, which provided that:
   1. no founder shareholder (including the husband) may 'sell, assign, transfer, declare itself trustee, mortgage, charge, pledge or otherwise dispose of or encumber' its shares without the prior written consent of the other founder shareholders,
   2. founder shareholders may issue a transfer notice to [B] Pty Ltd,
   3. upon receipt of a transfer notice, the other founder shareholders shall have the option to acquire the shares within 30 days, and
   4. [B] Pty Ltd in its absolute discretion may determine the value of the shares.
4. The two other founder shareholders put evidence to the Court (including oral and by way of Affidavit) that they would not be willing to 'pay any real consideration for the shares upon exercising their option to acquire them'.
5. The wife conceded that:
   1. her application did not seek to depart from the terms of the Shareholders Agreement,
   2. the only market for the sale of the husband’s shares was the other founding shareholders,
   3. the founder shareholders were not willing to pay any real consideration for the husband’s interest,
   4. the founder shareholders would not consent to the shareholdings being transferred to the wife, and
   5. the husband did not intend on selling his shareholdings.

The primary judge declined to attribute a value to the husband’s shareholding in the entity.

The appeal

On appeal by the wife the Court concluded that:

1. The expert’s opinion did not engage with the terms of the shareholders agreement and did not consider the evidence of the founder shareholders in circumstances where the single expert was not cross-examined at trial.
2. A trial judge may be assisted by the evidence of expert witnesses but ultimately the trial judge is to form his or her 'own independent judgment on the matter by the application of the appropriate principles'.¹

While the Court and parties will continue to be assisted through valuation evidence pursuant to the applicable rules, this is however a timely reminder to ensure that consideration is given to the specific circumstances of each matter.

Meint & Lyall [2026] FedCFamC1A24

¹ Lenehan, G.H.R. and Lenehan, J.I. [1987] FamCA 8; (1987) FLC 91-814; (1987) 11 FamLR 615