Company Director Leaving and Taking Clients

CarlMoran2

I wonder if anyone can help me please? For the last 14 years, I have been a 50/50 shareholder and company director of a limited company. Recently my co-director resigned as a director and an employee and told me that he was going to work for a company outside our industry. He retained his shareholding albeit thats not really worth a great deal.
I have just found out that contrary to what he told me, he is working for a competitor company in the same town and has been contacting our clients , trying to get them to move over to his new company. It also seems that he has taken with him a great deal of information, in fact everything he would need to transact business.

Is there anything legally I can do, we didn’t have any agreements in place, just standard M and A’s. ?

magenta22

That's business.

Unless there is something in his contract to say that he can't take clients to another company, you will just have to try and give a better offer.

SarEl

If you can prove that he has taken information, then that is theft. But prosecuting it without evidence that he has done so would be impossible, and even with evidence it may be difficult to obtain any real outcome. I am afraid that this is precisiely the reason why you have restrictive covenants in place in contracts - and since you don't have one then there is little you can do.

Jarndyce

magenta22 wrote: »

That's business.

Unless there is something in his contract to say that he can't take clients to another company, you will just have to try and give a better offer.

Not quite - there is an implied term in every contract that an employee will maintain his employer's confidence and respect their intellectual property. Whether they go as far as preventing the behaviour the OP is talking about is another matter.

There are additional rules governing directors which I'm no expert on but are worth researching here.

You will need to seek legal advice on this one to see whether what your ex-colleague is doing would breach the implied terms I mention - and make sure you put a reasonable restrictive covenant in people's contracts from now on!

getmore4less

I think one tactick is to also consider legal action against the employer.

They can do things you can't, like sack him to avoid any further issues.

CarlMoran2

Thanks everyone - getmore4less - do you mean to consider legal action against his new employer for them canvassing my clients?

double_mummy

if he has taken customer details from your company then the Data Protection act could have been breached and that could cause problems for him if you took it further

also if you are in the financial, legal, or things of that type business and he is found to be in breach then his reputation will be seriously damaged and can lose his profession body membership (if he has one)

getmore4less

CarlMoran2 wrote: »

Thanks everyone - getmore4less - do you mean to consider legal action against his new employer for them canvassing my clients?

Yes and anything else you think you could nail them for

They may not know that this is happening.

Some places will not take kindly to this sort of poaching since they don't want it happening tothem when the employee moves on so they FIX the situation. other however will not care.

Acc72

getmore4less wrote: »

Yes and anything else you think you could nail them for

They may not know that this is happening.

Some places will not take kindly to this sort of poaching since they don't want it happening tothem when the employee moves on so they FIX the situation. other however will not care.

I disagree with the above, indeed I am sure that the new company saw such an employee without restrictive covenants as a major coup.

I am sure that this persons contract with the new company does contain restrictive covenants.

When setting up businesses or partnerships etc, a lot of people do not consider what will happen if things go wrong, because they are positive and assume that things will not go wrong (a bit like a marriage !!). It appears that this was overlooked when you set up the company.

To the OP, it is worth seeking initial advice (you will need all contracts and agreements).

Be aware that any legal action will be very costly, both financial and on your time and you need to decide if you can afford either.

Good luck.