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Non-compete clause invalidated because it extended to minor shareholdings in a competing business

July 28, 2017

 

 The Court of Appeal has set aside an injunction upholding a six-month non-compete restrictive covenant. The restriction sought to prevent the employee from being concerned or interested in any competing business for a period of six months from termination, but did not contain an express limitation allowing the employee to hold a minor shareholding in a competing business for investment purposes.

 

Given that the phrase "interested in" included holding one share in a publicly quoted company, this rendered the restriction impermissibly wide, and therefore void. The court rejected an argument that the words "or interested" could be deleted or severed from the relevant provision in order to leave a valid restriction.

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