Leaving business as shareholder - signing a non-compete??
Discussion
If the business is only worth £100k why all the fuss. Why is the major shareholder looking to tie you up for 3 years -seems OTT. If you genuinely don't want to compete ask him for £12.5k and to pay your legal fees. If he won't play ball then open a business and compete. You may devalue your shareholding in the original business but if you end up putting him out of business you will have a £100k business that has cost you £10k? Well maybe.
CR6ZZ said:
The non-compete clause in the contract at my firm is only 6 months. Three years seems way OTT.
There is a difference between the law's attitude to restrictive covenants in employee contracts and its attitude to restrictive covenants in business vendor contracts. A covenant that would be too long if applied to an employee might be enforceable if applied to a business vendor. In the present case, where the OP owns only part of the business and the value of his stake is not huge, a three year restriction might be too long, but the point wouldn't be as clear cut as it would be if the contract were simply between employer and employee. What? I think the OP is just trying to get his 10k investment back - not start a trade war!
elanfan said:
If the business is only worth £100k why all the fuss. Why is the major shareholder looking to tie you up for 3 years -seems OTT. If you genuinely don't want to compete ask him for £12.5k and to pay your legal fees. If he won't play ball then open a business and compete. You may devalue your shareholding in the original business but if you end up putting him out of business you will have a £100k business that has cost you £10k? Well maybe.
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