This document is a non-compete clause which can be added to an existing shareholders’ agreement.
Where a shareholder holds sufficient shares in a company to enable him or her to meaningfully impact the decisions made by that company, it is advisable to incorporate a clause in the shareholders’ agreement limiting the ability of that shareholder to compete with the company.
Using this precedent
This is a general clause to be added to a shareholders’ agreement. It can also be used to add non-compete provisions to the separate precedent “Shareholders’ agreement (short form)”.
When inserting this optional clause into an agreement, care must be taken to ensure that the agreement remains consistent. Cross-references, definitions and schedules should all be checked.
This document has been authored for Lexis Nexis by Elise Margow, Principal, Legally Speaking.
This document is prepared with the assistance of Specialist Editor Stephen Newman, Executive Counsel, Ponte Earle.