To remove an ex-partner from your business structure: (1) directors can resign voluntarily or be removed by shareholder resolution, (2) share transfers require proper documentation and consideration of stamp duty and CGT, (3) trust deed amendments need formal variation, and (4) guarantee releases require lender agreement. If your ex-partner will not cooperate, options depend on your company constitution, shareholders agreement, and property settlement orders.
Key Takeaways
- Unresolved ex-partner situations affect finance, decisions, and sale ability
- Different removal processes apply to directors, shareholders, and trust beneficiaries
- Guarantee releases require lender agreement, not just ex-partner consent
- Uncooperative ex-partners can often be addressed through constitution provisions or court orders
Ex-Partner Still a Director or Shareholder? Here Is How to Fix It
You started the business together. Now the relationship is over, but your ex is still listed as a director, shareholder, or trust beneficiary. Every time you try to do something with the business, it gets complicated.
This is one of the most common structural problems we see in construction businesses. The personal relationship ended, but the business structure was never cleaned up.
Now you are stuck. Banks ask difficult questions. You cannot make major decisions cleanly. And the thought of selling or transitioning the business seems impossible.
Signs Your Business Structure Has an Ex-Partner Problem
- Your ex is still listed as a director on ASIC records
- They still hold shares in one or more of your companies
- They are named as a beneficiary in your family trust deed
- They have signing authority on bank accounts or finance facilities
- Their name appears on personal guarantees alongside yours
- You need their signature to do things with the business and they are uncooperative
Why This Matters More Than You Think
An unresolved ex-partner situation is both awkward and can cause financial difficulties for your business. The Australian Securities and Investments Commission (ASIC) requires accurate company records, and outdated director or shareholder information can create real business problems:
Finance access
Banks do not like lending when ownership or governance is unclear. They see unresolved ex-partner situations as a red flag for potential disputes and complications.
Decision-making
If your ex is still a director or shareholder, they may have legal rights to be involved in major decisions. Under the Corporations Act, directors have specific duties and shareholders have specific rights. This can create deadlocks.
Sale or exit
You cannot sell a business cleanly if someone else has ownership rights or is still listed as a director. Buyers walk away from messy structures or demand significant price reductions.
Liability exposure
If your ex is still a director, they have director duties under section 180-184 of the Corporations Act. If they are not fulfilling them, that creates risk for the company.
Trust distributions
If your family trust still names your ex as a beneficiary, the trustee has fiduciary obligations to consider their interests when making distributions.
Why It Often Does Not Get Fixed
Most people know this needs to be sorted out. It stays unresolved because:
1. The separation was difficult enough.
Nobody wanted to add more complexity during an already stressful time.
2. It got missed in the property settlement.
Family lawyers focused on the house and superannuation, not the business structure details. The business might have been valued and allocated, but the structural cleanup was left incomplete.
3. Your ex will not cooperate.
They refuse to sign transfer documents or resign as director. Sometimes this is spite; sometimes they believe they still have entitlements.
4. You do not know what is actually required.
The legal and tax implications seem overwhelming, so nothing happens. Stamp duty, capital gains tax, trust variations – it all feels too hard.
5. Accountant did not do this work.
Often your accountant set up your business, but they may not think to take these steps unless you ask them to.
What Removing an Ex-Partner Actually Involves
The process depends on what roles your ex holds and whether they are cooperative:
Removing a director
If they are willing, they simply resign by giving written notice. If not, shareholders may be able to remove them by ordinary resolution under section 203D of the Corporations Act, depending on your company constitution. ASIC records must be updated within 28 days using Form 484. Be aware that some constitutions require special resolution or give directors protections against removal.
Transferring shares
Share transfers need proper documentation including a share transfer form and updated share register. Stamp duty applies in most states based on the greater of consideration paid or market value. Capital gains tax applies to the transferor. If your ex will not cooperate, you may need to rely on provisions in your shareholders agreement, constitution (some include compulsory transfer provisions), or seek court orders.
Amending trust deeds
Removing a beneficiary from a trust deed requires a formal deed of variation. The trustee must follow proper process and verify that the trust deed actually permits the amendment. Many older trust deeds have restrictions on removing primary beneficiaries. Professional advice is essential.
Releasing from guarantees
If your ex is on personal guarantees, you need the lender’s agreement to release them. This is not automatic even with their consent. Lenders will typically require refinancing, demonstration that the business can stand without their guarantee, or substitution of alternative security. This often takes the longest to resolve.
Case Study: Unwinding an Ex-Spouse from a $22M Building Company
A residential building company owner came to us three years after his divorce. His ex-wife was still listed as a director and 50% shareholder despite the business being allocated to him in the property settlement. The consent orders said he got the business, but nobody had actually transferred the shares or processed her resignation. Their bank was now asking questions about governance as part of a facility review.
The ex-wife would not respond to requests to sign transfer documents. We reviewed the consent orders and company constitution, then prepared documentation relying on the court orders as authority to register the share transfer without her signature. Her directorship was terminated by shareholder resolution using his 100% ownership following the transfer. ASIC records were updated to reflect accurate current status.
The bank facility review proceeded smoothly once governance was clarified. Total time from engagement to completion was eight weeks. The client wished he had done it three years earlier, as the uncertainty had affected multiple financing decisions in the interim.
What If Your Ex-Partner Will Not Cooperate?
If your ex-partner refuses to sign documents or cooperate with the restructure, your options depend on:
Your company constitution
Some constitutions include compulsory transfer provisions, drag-along rights, or specific processes for removing uncooperative shareholders.
Shareholders agreement
If you have one, it may include buy-out provisions, valuation mechanisms, and processes for resolving deadlocks.
Property settlement or consent orders
If your divorce settlement allocated the business to you, the court orders may provide authority to transfer shares without their signature.
Court orders
As a last resort, court orders can compel cooperation or authorise transfers. This is expensive and slow but sometimes necessary.
These situations are more common than you might think, and there are usually pathways through them. But they need to be handled carefully to avoid making things worse.
Frequently Asked Questions
1. Can I remove my ex as a director without their consent?
In most cases, shareholders can remove a director by ordinary resolution under section 203D of the Corporations Act. However, your company constitution may modify this right, require special resolution, or provide directors with protections. If you hold sufficient shares to pass the required resolution, removal is possible without their consent. Check your constitution carefully or seek advice.
2. What if my ex will not sign the share transfer?
If your property settlement or consent orders allocated the shares to you, these court orders may provide authority to register the transfer without their signature. Alternatively, your shareholders agreement or constitution may include compulsory transfer provisions. If no contractual or court basis exists, you may need to seek court orders compelling the transfer or appointing someone to execute the transfer on their behalf.
3. Do I need to pay my ex for their shares?
If the shares were already allocated to you in a property settlement, no additional payment should be required – the settlement determined value and consideration. If no settlement occurred, the shares must be purchased at fair value. Even if no cash changes hands, stamp duty applies based on market value, and CGT applies to the transferor.
4. How long does it take to remove an ex-partner from a business structure?
With cooperation, the process can be completed in 2-4 weeks. Without cooperation, timelines depend on which enforcement mechanisms are available. If court orders from a property settlement exist, 6-8 weeks is typical. If new court proceedings are required, 6-12 months is more realistic. Guarantee releases often take longest, as banks have their own processes and timelines.
5. What happens to personal guarantees my ex signed?
Personal guarantees remain in force until specifically released by the lender. Your ex’s resignation as director or transfer of shares does not automatically release their guarantees. You must negotiate release with each lender individually, which typically requires demonstrating the business can stand without their guarantee or providing substitute security.
Get Your Structure Assessed
Our Construction Business Structure Review identifies all the places your ex-partner appears in your business structure: company records, trust deeds, bank authorities, guarantees, and more. We then map out exactly what needs to happen to clean it up, including the tax implications and the process for uncooperative situations.
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