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In South Africa, a buy-and-sell agreement does not override a spouse’s matrimonial-property rights, and divorce does not automatically trigger a buy-and-sell arrangement unless the agreement says that it does.
Where spouses are married in community of property, section 15 of the Matrimonial Property Act may also require written spousal consent before shares or certain insurance-policy rights forming part of the joint estate are dealt with.
Buy-and-sell agreements are commonly used by shareholders, close corporation members and business partners to regulate what happens when a specified event affects one of the owners.
Death and permanent disability are common trigger events. Some agreements also address retirement, insolvency or other specified circumstances.
Divorce introduces a different problem.
The agreement governs contractual rights between the business participants, while matrimonial law determines the proprietary rights of the spouses. Both frameworks may therefore have to be considered before a transaction involving a business interest can safely be implemented.
This article provides general information about South African law. It does not constitute legal, financial, tax or other professional advice and does not predict the outcome of an individual matter.
| Question | General position |
Does divorce automatically trigger a buy-and-sell agreement? | No. The agreement must provide for divorce or another applicable trigger event. |
Does a buy-and-sell agreement override matrimonial property law? | No. Contractual and matrimonial-property consequences must be considered together. |
Can written spousal consent be required for a share transaction? | Yes. Section 15(2)(c) may apply where shares forming part of a joint estate are alienated, ceded or pledged. |
Does the ordinary course of business remove the consent requirement? | Sometimes. Section 15(6) creates an exception, but it is fact-specific. |
What happens if required consent is missing? | Subject to section 15(9)(a), the transaction may be void and unenforceable. |
Can a purchaser rely on not knowing that consent was required? | Only if the requirements of section 15(9)(a) are established, including the reasonable-enquiry requirement. |
Can the joint estate be adjusted later? | Section 15(9)(b) may permit an adjustment where its requirements are met and the joint estate suffered loss. |
Are insurance policies relevant? | Yes. Many buy-and-sell arrangements are insurance-funded, and section 15(2)(c) expressly refers to insurance policies forming part of the joint estate. |
| Does an accrual claim automatically give a spouse shares? | No. An accrual claim ordinarily sounds in money. |
| Can redistribution apply where accrual was excluded? | Potentially. The current section 7(3) position following EB v ER; KG must be considered. |
| Is the buy-and-sell valuation automatically the divorce value? | No. Its relevance depends on the purpose, wording and circumstances. |
A buy-and-sell agreement is a contract regulating what happens to a participant’s business interest when an agreed trigger event occurs.
It may operate between shareholders, members of a close corporation, partners, or other business participants.
A typical agreement identifies the trigger event, determines who must or may purchase the interest and provides a mechanism for calculating the price.
Many arrangements are funded through life or disability insurance. On a qualifying death or disability, insurance proceeds can provide the funds needed to acquire the affected owner’s business interest.
The precise structure varies considerably. For that reason, the agreement itself must always be read before assumptions are made about what a divorce, death or disability actually triggers.
Not automatically.
Many conventional agreements are drafted principally around death and disability.
A divorce will trigger the agreement only if its wording makes divorce an agreed trigger, or if another provision becomes applicable because of what occurs during the divorce.
For example, the agreement may become relevant because:
For the broader contractual transfer mechanics, see our article on Divorce Clauses in Shareholders’ Agreements in South Africa.
A buy-and-sell agreement answers contractual questions between the business participants.
It does not determine the spouses’ matrimonial regime.
The first question in a divorce involving a business interest should therefore be whether the parties are married:
The answer materially affects the nature of the spouse’s claim.
Section 15(2)(c) of the Matrimonial Property Act 88 of 1984 provides that a spouse married in community of property may not, without the other spouse’s written consent, alienate, cede or pledge specified assets forming part of the joint estate.
Those specified assets include:
Primary source: Matrimonial Property Act 88 of 1984
This provision can become important where a buy-and-sell arrangement requires a shareholding or other relevant asset to be transferred, ceded or pledged.
Registration of the shares in only one spouse’s name does not, by itself, remove the matrimonial-property issue.
Section 15(6) provides an exception for certain transactions, including those within section 15(2)(c), where the relevant act is performed in the ordinary course of the spouse’s profession, trade or business.
That does not mean every transaction involving business shares automatically falls within the exception.
The enquiry is factual. The transaction must actually fall within the ordinary course of the relevant spouse’s profession, trade or business.
Malunga and Another v Sanqela [2025] ZAWCHC 133 provides a particularly useful modern example.
The case involved an option to acquire a 50% shareholding. The shareholder who granted the option was married in community of property and his spouse had not given the required consent.
The Full Court held that the exercised option constituted an alienation for purposes of section 15(2)(c).
It also rejected reliance on the ordinary-course-of-business exception on the facts.
The remaining question was whether the purchaser could rely on section 15(9)(a).
Section 15(9)(a) protects a qualifying third party where that person did not know, and could not reasonably have known, that the transaction was entered into without the required consent.
That does not permit a purchaser simply to avoid asking questions.
Malunga confirmed that the party relying on section 15(9)(a) must make the enquiries a reasonable person would make about:
The purchaser in Malunga, acting through her attorney, had failed to make those reasonable enquiries.
She therefore could not rely on deemed consent.
The transaction was consequently ineffective for want of the required spousal consent.
The answer depends on the statutory provisions and facts.
Where a transaction falling within sections 15(2) or 15(3) is concluded without the necessary consent, it is generally void and unenforceable unless section 15(9)(a) operates to deem the required consent to have been given. Malunga applied that principle directly.
There may also be consequences between the spouses.
Section 15(9)(b) provides for an adjustment upon division of the joint estate where the contracting spouse knew or ought reasonably to have known that the necessary consent would probably not be obtained and the joint estate suffered a loss as a result.
A person dealing with shares in a joint estate should therefore not assume that an unauthorised transaction is merely an issue between the spouses. It may affect the validity of the transaction itself.
This deserves separate consideration.
Life and disability policies are frequently used to fund buy-and-sell arrangements.
The insurance and the underlying sale obligation are nevertheless separate legal components of the structure.
Section 15(2)(c) expressly refers not only to shares but also to insurance policies forming part of the joint estate.
The precise consent implications depend on what is being done with the policy.
For example, it may be necessary to examine whether a policy forming part of the joint estate is being:
Not every act concerning an insurance policy necessarily has the same consequence.
The policy owner, beneficiary structure, funding arrangement and wording of both the insurance documents and the buy-and-sell agreement should therefore be checked.
This is particularly important where the agreement assumes that policy proceeds will fund an acquisition of a business interest.
Hattingh v Furman and Others NNO [2020] ZASCA 123 concerned a buy-and-sell agreement relating to a member’s interest in a close corporation.
It was not a divorce case.
The matrimonial issue arose after Hattingh’s wife, to whom he was married in community of property, died. Her share of the joint estate included an interest connected with Hattingh’s member’s interest in the close corporation.
The business arrangement included life-insurance policies intended to fund the purchase of a member’s interest following death or disability.
After the wife’s death, an addendum purported to reverse Hattingh’s acquisition of his interest.
When the dispute ultimately reached the Supreme Court of Appeal, the judges differed on the reasoning.
The application for leave to appeal was ultimately dismissed. Van der Merwe JA, with Molemela JA and Mbatha JA concurring, concluded that the addendum was simulated and that the law should give effect to the true transaction rather than its outward form.
Ledwaba AJA reached the opposite conclusion on simulation and would have allowed the appeal. Ponnan JA, with Mbatha JA concurring, also concluded that leave should be refused, but by a different route.
The case should therefore not be presented as establishing a simple rule that a buy-and-sell arrangement is invalid whenever it affects a matrimonial estate.
Its value is narrower. It illustrates that courts may examine the substance and genuine legal effect of arrangements alleged to have been structured to avoid consequences relating to a joint estate.
Where the accrual system applies, the spouses retain separate estates during the marriage.
A business interest held in one spouse’s estate may nevertheless affect the accrual calculation.
The other spouse’s accrual entitlement is ordinarily a monetary claim.
It does not automatically make that spouse a shareholder, member, partner or the owner of a specified portion of the business interest.
A buy-and-sell valuation may provide useful evidence of value. It does not automatically determine the value to be used for matrimonial purposes.
Where accrual has been excluded, the spouses generally retain separate estates.
That is no longer the complete answer, however.
In EB (born S) v ER (born B); KG v Minister of Home Affairs [2023] ZACC 32, the Constitutional Court declared the historical restriction in section 7(3)(a) of the Divorce Act unconstitutional.
Pending remedial legislation, the Court ordered section 7(3)(a) to be read without the requirement that the marriage must have been concluded before 1 November 1984.
Accordingly, a redistribution claim under section 7(3) may now be available in an appropriate marriage out of community of property without accrual, irrespective of when the marriage was concluded, provided the statutory requirements are established.
The remedy remains discretionary. It does not automatically give a spouse particular shares.
The General (Family) Laws Amendment Bill B20-2025 has been introduced partly to address the consequences of the Constitutional Court judgment.
As at September 2026, the Bill remains before Parliament and has not yet become law.
Parliament bill page: General (Family) Laws Amendment Bill B20-2025
No.
De Sousa v Technology Corporate Management (Pty) Ltd and Others; De Sousa v De Sousa and Another [2018] ZAGPJHC 445 dealt with former spouses who had been married in community of property.
The husband was the registered holder of a 30% shareholding.
After divorce, but before division of the joint estate, the former wife contended that she had become entitled to 15% of the shares and associated shareholder rights.
The High Court rejected that approach.
Her entitlement arose through the division of the joint estate; divorce did not automatically make her the registered holder of half of the shares.
That distinction is important in buy-and-sell disputes.
Matrimonial entitlement to value is not necessarily the same thing as registered ownership of the business interest.
For the separate rules governing actual transfers to a former spouse, shareholder consent, rights of first refusal and MOI restrictions, see Divorce Clauses in Shareholders’ Agreements in South Africa.
Not automatically.
A contractual valuation formula was created for the purpose identified in the agreement.
Its figure may be highly relevant, particularly where the mechanism is current, independently applied and commercially realistic.
But a matrimonial valuation may ask a different question.
Factors such as the relevant valuation date, minority status, control, marketability, shareholder loans and the purpose of the valuation may affect the analysis.
Where value is material or disputed, an independent valuation may be required.
The documents should be considered together rather than in isolation.
Not automatically. A contract between business participants does not by itself determine the proprietary consequences of a marriage.
Incorrect. In a marriage in community of property, section 15 may apply even where the business interest is registered in only one spouse’s name.
Not necessarily. Malunga confirms that a person seeking the protection of section 15(9)(a) may be required to make reasonable enquiries.
No. The agreement’s wording determines its trigger events.
Not necessarily. The contractual formula may be evidence of value without necessarily resolving the matrimonial valuation.
No. A matrimonial claim to an interest or value is not necessarily the same as corporate registration as a shareholder.
Only if the agreement provides for divorce as a trigger, or another applicable contractual event occurs.
If you are married in community of property and the proposed transaction falls within section 15(2)(c), written consent may be required, subject to applicable statutory exceptions.
Unless section 15(9)(a) applies, a transaction concluded contrary to the statutory prohibition may be void and unenforceable. There may also be an adjustment claim under section 15(9)(b) where its separate requirements are met.
No. The mere fact that an asset is a business asset does not establish that its disposal occurred in the ordinary course of the spouse’s profession, trade or business.
Potentially very important. Buy-and-sell agreements are often funded through insurance, and section 15(2)(c) expressly includes insurance policies among the listed assets to which the written-consent rule may apply when the relevant statutory act is performed.
That depends on the matrimonial regime, settlement or court order and the applicable company-law framework. A financial or matrimonial interest does not automatically make the spouse a registered shareholder.
A buy-and-sell agreement cannot safely be analysed in isolation from the matrimonial property regime.
For marriages in community of property, section 15 can directly affect transactions involving shares and insurance policies.
For accrual marriages, the business interest may affect the monetary accrual calculation without transferring shareholder status.
For marriages excluding accrual, the current section 7(3) redistribution framework must also be considered where applicable.
The practical question is therefore not simply:
“What does the buy-and-sell agreement say?”
It is:
“Can the agreement lawfully operate in the circumstances of this marriage, this transaction and this business structure?”
Martin Vermaak Attorneys Inc. advises on South African divorce and family-law matters involving business interests, buy-and-sell agreements, shareholder arrangements, joint estates, accrual and redistribution claims, and disputes concerning the treatment of private-company interests on divorce.
Where a substantial business interest is involved, reviewing the matrimonial regime, business agreements and funding structure before a divorce settlement is finalised can identify consent, ownership and implementation problems before they become disputes.
Author: Martin Vermaak, B.Proc, LLB
Attorney of the High Court of South Africa | Director, Martin Vermaak Attorneys | Over 20 years’ experience in divorce and family law
Disclaimer
This information has been prepared for general educational purposes only and is not intended to constitute legal, financial, tax or other professional advice. South African family law is fact-specific, and the applicable legal position may depend on the circumstances of the individual matter. Readers should obtain independent professional advice appropriate to their circumstances before making legal, financial or other decisions.
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