Non Compete Clause In Share Purchase Agreement Template for England and Wales

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Key Requirements PROMPT example:

Non Compete Clause In Share Purchase Agreement

"I need a Non Compete Clause In Share Purchase Agreement for the sale of my technology consulting business, with a 3-year restriction period across Greater London and specific provisions to prevent the poaching of our senior developers and key clients."

Document background
The Non-Compete Clause In Share Purchase Agreement is a crucial component of business acquisitions under English and Welsh law, designed to protect the buyer's investment and maintain the acquired business's value. This document is typically used when completing share purchases where there's a risk that the seller could establish competing operations or divert business opportunities post-sale. The clause specifies prohibited activities, geographical limitations, and time restrictions, all of which must be reasonable to be enforceable. It often includes provisions regarding customer and employee non-solicitation, confidentiality obligations, and specific carve-outs for permitted activities.
Suggested Sections

1. Parties: Identification of the buyer and seller(s) with full legal details

2. Background: Context of the transaction and reason for the non-compete provisions

3. Definitions: Key terms used in the clause including restricted business, territory, and period

4. Scope of Restrictions: Detailed description of prohibited activities

5. Duration: Time period for which restrictions apply

6. Geographic Scope: Territorial limits of the restrictions

Optional Sections

1. Non-Solicitation of Employees: Used when protecting against poaching of key staff

2. Non-Solicitation of Customers: Used when protecting customer relationships

3. Confidentiality Provisions: Used when specific confidential information needs protection

4. Garden Leave: Used when seller remains employed post-completion

Suggested Schedules

1. Restricted Territory Map: Visual representation of geographic restrictions

2. List of Restricted Customers: Specific customers covered by non-solicitation provisions

3. List of Restricted Products/Services: Detailed description of products/services covered by restrictions

4. Consideration Schedule: Details of any specific consideration for the restrictions

Authors

Alex Denne

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

Relevant Industries
Relevant Teams
Relevant Roles
Industries

Common Law Doctrine of Restraint of Trade: Primary legal framework for non-compete provisions that requires restrictions to be reasonable and necessary to protect legitimate business interests. Any restraint must not be wider than necessary in terms of duration, geographical scope, and prohibited activities.

Competition Law: Includes Competition Act 1998, Enterprise Act 2002, and EU retained law post-Brexit. Ensures the non-compete provisions do not amount to anti-competitive behavior in the market.

Companies Act 2006: Primary legislation governing company law in the UK, particularly relevant for share transactions and corporate governance aspects in share purchase agreements.

Contract Law: Includes Law of Property (Miscellaneous Provisions) Act 1989, requiring proper consideration and clear, unambiguous drafting of contractual terms.

Employment Law: Employment Rights Act 1996 and TUPE Regulations 2006, particularly relevant if sellers are also employees of the company being sold.

Relevant Case Law: Key precedents including Nordenfelt v Maxim Nordenfelt [1894], TFS Derivatives Ltd v Morgan [2004], and Merlin Financial Consultants Ltd v Cooper [2014] that establish principles for non-compete restrictions.

Data Protection: UK GDPR and Data Protection Act 2018 considerations, particularly relevant when non-compete restrictions involve handling of customer or client data.

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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