Kenya Court Rules Shares Are Part of Matrimonial Assets

The Court of Appeal has ruled that shares acquired during marriage, even if held through companies, qualify as matrimonial property and can be divided upon divorce.

In a case involving a dispute between a divorced couple, identified as Mr GKW and Ms RNK, the appellate court upheld an earlier High Court decision allowing Ms RNK to claim a share of her former husband’s interests in seven companies. These firms, she argued, held properties acquired during their marriage, including the family home, which was registered under one of the company names.

The bench, comprising Justices Daniel Musinga, Mumbi Ngugi, and Francis Tuiyott, ruled that all assets acquired during marriage are subject to division, regardless of the legal structures used to hold them. The judges said that shares are assets and, as such, fall within the definition of matrimonial property under the Constitution.

Mr GKW had contested the inclusion of the companies in the suit, arguing that matrimonial property proceedings should only involve the spouses. His legal team relied on the now-repealed Married Women’s Property Act of 1882 and raised concerns about piercing the corporate veil, warning that this could delay the case and affect other shareholders not party to the dispute.

The Court rejected these arguments, affirming that courts may allow amendments to include third parties, such as companies, where necessary to resolve the real issues in dispute. The judges emphasised that potential delays are not a sufficient reason to prevent such changes and that courts must focus on the substance of ownership rather than its legal form.

This ruling confirms that limited liability companies can be joined in matrimonial property proceedings if they hold assets acquired during the marriage. The decision aims to prevent spouses from using corporate entities to shield marital assets from equitable distribution.