Restraint Of Trade Clause In Shareholders Agreement



Restraint Of Trade Clause In Shareholders Agreement

Mr. Shelmerdine argued that, given that they were in effect for 12 months after the shareholder waiver and not from the date of termination of the advisory agreement, the Covenants exceeded what was reasonably necessary to protect GSW`s legitimate business interests. In this case, it was a board agreement, but similar considerations would apply with respect to employee shareholders and the termination of their employment relationship. If your company`s shareholders have included a non-compete clause in the shareholders` agreement or are considering doing so to prevent shareholders from competing with the company after the sale of their shares, careful wording is necessary to ensure that the clause is appropriate and therefore applicable in the current circumstances. Trade restriction clauses can be subdivided into: As a general rule, a shareholders` agreement includes the following points. Restriction clauses limit a person`s ability to provide services similar to those provided by the business during and after their employment, engagement or sale in the business. An employer may apply a trade restriction clause only to the extent reasonably necessary to protect its business interests. However, the reasonable need for a clause depends on the particular circumstances of the case and, in the event of a dispute, it is preferable to obtain professional legal advice. If you would like to discuss your case with a lawyer, please contact us at (02) 9963 9800 or via our contact form.