Retail investors rattled by 'divorces of the century' — what US and Chinese cases show

Divorce leaves scars not only on the parties involved and their families. When a divorcing party is a major shareholder of a listed company, investors too can find themselves rattled by the news.

The South China Morning Post reported Friday that concerns are growing in China's A-share market over governance changes — and the resulting erosion of company value — stemming from divorces among controlling shareholders.

Among the listed companies affected is Maxone Semiconductor Suzhou, a maker of key semiconductor inspection equipment. Zhou Ming, the company's founder and CEO, transferred a 10.86 percent stake to his ex-wife as part of a divorce settlement. Based on the closing price on the day of the transfer, that stake was valued at 6 billion yuan (1.3 trillion won, or about $885 million).

Zhan Lixiong, founder of data center IT infrastructure services firm Trust and Far Technology, was also served with divorce papers by his wife last week. Zhan holds a 20.73 percent stake in the company, and his wife is seeking a division of assets — a move that could alter his shareholding going forward.

In 2023, Zhou Hongyi, founder of 360 Security Technology, divorced his wife and transferred 6.25 percent of the company's shares to her as part of the settlement. That stake was valued at 9 billion yuan ($1.33 billion) at the time.

The South China Morning Post said investors are growing anxious that management reshuffles could follow changes in ownership structure after shares are transferred in a divorce settlement — and that, in the worst case, a controlling shareholder's ex-spouse could dump the shares, sending the stock price lower. Some have argued that because a major shareholder's divorce directly affects corporate governance, companies should be required to disclose divorce proceedings or settlements as they unfold.

Fu Yifu, a senior researcher at China Merchants Bank, said share disposals are subject to China Securities Regulatory Commission and exchange rules, but that investors remain worried about concentrated selling pressure once the shares become tradable after a settlement. He added that "retail investors' concerns stem from a deep distrust of corporate governance stability and from past cases," and that "listed companies need greater transparency and consistency in disclosure to ease those concerns."

The United States has already seen several "divorces of the century" — most notably those of Amazon founder Jeff Bezos and Microsoft co-founder Bill Gates. When Bezos divorced in 2019, his wife MacKenzie gave him full control of their joint Amazon stake, taking only 25 percent of the shared holdings — roughly 4 percent of Amazon's total shares — for herself. MacKenzie is widely regarded as a virtual co-founder of Amazon: the couple quit their Wall Street jobs to start the company, with MacKenzie packing and shipping books from a garage while handling all accounting and administrative work. She and Bezos are said to have jointly conceived every early idea for the business, including the company's name.

Even so, MacKenzie is said to have made the concession to prevent Amazon's management from being destabilized or its share price from collapsing. She secured only 25 percent of the couple's joint stake and transferred all voting rights attached to her Amazon shares — 4 percent of the total — to Bezos. The arrangement allowed Bezos to maintain stable control of Amazon even after the divorce. MacKenzie also ceded all other assets — including space exploration company Blue Origin and newspaper The Washington Post — to Bezos. Her own stake was still valued at approximately $38.3 billion at the time.

The details of the asset division in Bill Gates's 2021 divorce from Melinda were never made public. Washington state, where the couple lived, follows a community property principle requiring that assets accumulated during a marriage be split equally between spouses. On that basis, Forbes and others estimated that Melinda likely received close to half of Gates's fortune — then approximately $152 billion — or roughly $76 billion in the settlement.

In South Korea, a court ruled Friday that SK Group Chairman Chey Tae-won must pay 944 billion won in a property division settlement to Noh So-young, director of Art Center Nabi. The court included shares of SK Inc. — the central point of contention — in the assets subject to division, allocating two-thirds to Chey and one-third to Noh. The court explained that the split ratio took into account "the assets held by each party at the time of marriage, the circumstances under which marital assets were acquired, the degree of each party's contribution to the formation and maintenance of those assets, and the length of the marriage."

Legal experts said that compared with the lower-court rulings in the couple's earlier divorce proceedings, Friday's ruling on remand effectively sided with Noh.

The court accepted Noh's argument on the pivotal question of whether SK shares should be included in the assets subject to division.

The court also ordered Chey to pay annual interest of 5 percent from the day after the ruling becomes final until the full amount is paid. That amounts to about 47.2 billion won per year, or roughly 130 million won per day.