Non Compete Clause In Shareholders Agreement

Non Compete Clause In Shareholders Agreement Template for Canada

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Key Requirements PROMPT example:

"I need a Non Compete Clause in Shareholders Agreement for my Toronto-based software development company, restricting shareholders from competing within Canada and the US for 2 years, with particular focus on protecting our AI technology intellectual property and customer relationships."

Document background

This document is essential when establishing restrictive covenants within a shareholders agreement under Canadian law. A Non-Compete Clause in Shareholders Agreement is typically implemented when companies need to protect their business interests from competition by their shareholders, particularly in situations involving key shareholders who have access to sensitive information or significant influence over the company's operations. The document needs to carefully balance the company's legitimate business interests with Canadian legal requirements regarding reasonable restrictions on trade and competition. It includes specific provisions about geographic limitations, time periods, and scope of restricted activities, all tailored to meet the enforceability requirements under Canadian federal and provincial laws. This type of agreement is particularly crucial during corporate restructuring, when bringing in new shareholders, or when establishing governance frameworks for startups and growing companies.

Suggested Sections

1. Parties: Identification of all shareholders who are party to the agreement and the corporation

2. Background: Context of the agreement, relationship between parties, and purpose of the non-compete provisions

3. Definitions: Key terms including 'Competitive Business', 'Restricted Territory', 'Restricted Period', and other relevant definitions

4. Non-Compete Obligations: Core restrictions on competitive activities, including scope, geographic limitations, and duration

5. Non-Solicitation Provisions: Restrictions on soliciting employees, customers, suppliers, or other business relationships

6. Confidentiality Obligations: Protection of confidential information and trade secrets

7. Exceptions and Permitted Activities: Specific circumstances or activities exempt from the non-compete restrictions

8. Duration and Territory: Explicit statement of time period and geographic scope of restrictions

9. Enforcement and Remedies: Rights and remedies in case of breach, including injunctive relief

10. Severability: Provisions for maintaining validity if certain clauses are found unenforceable

Optional Sections

1. Transfer of Shares: Include when specific share transfer restrictions relate to non-compete obligations

2. Garden Leave: Add when shareholders are also employees and transition periods are needed

3. Consideration: Include when specific consideration is provided for the non-compete obligations

4. Independent Legal Advice: Add when there's significant disparity in bargaining power or complexity

5. Dispute Resolution: Include when specific arbitration or mediation procedures are desired

6. Assignment Rights: Add when transfer of rights under the agreement needs to be addressed

7. Survival Provisions: Include when certain obligations need to survive termination of shareholding

Suggested Schedules

1. Schedule A - Restricted Territory: Detailed description or map of geographic areas covered by non-compete restrictions

2. Schedule B - Competitive Business Definition: Detailed description of prohibited business activities and competitors

3. Schedule C - Consideration Details: If applicable, detailed breakdown of consideration provided for non-compete obligations

4. Schedule D - Shareholder Information: Details of shareholdings and classification of shareholders subject to restrictions

5. Appendix 1 - Compliance Guidelines: Practical guidance for shareholders on compliance with non-compete obligations

6. Appendix 2 - Notice Requirements: Forms and procedures for required notices under the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ ��Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Technology

Professional Services

Healthcare

Manufacturing

Retail

Financial Services

Consulting

Research and Development

Biotechnology

Software Development

Engineering Services

Media and Entertainment

Relevant Teams

Legal

Corporate Governance

Executive Leadership

Board of Directors

Compliance

Corporate Secretary Office

Shareholder Relations

Business Development

Risk Management

Investment Relations

Relevant Roles

Chief Executive Officer

Chief Legal Officer

Corporate Lawyer

General Counsel

Company Secretary

Chief Financial Officer

Business Development Director

Managing Director

Board Member

Corporate Governance Officer

Compliance Officer

Legal Counsel

Investment Manager

Shareholder Relations Manager

Chief Operations Officer

Find the exact document you need

General Non Compete Agreement

A Canadian-compliant agreement that restricts competitive activities post-employment or post-business relationship, subject to reasonable limitations and provincial regulations.

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Let's create your Non Compete Clause In Shareholders Agreement

Authors

Alex Denne

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