Are non-compete covenants binding on shareholders and senior management?
For directors and senior management, a statutory non-compete obligation exists inherently—after leaving office they may not operate, on their own account or for another, a business competing with that of the company they served. For ordinary shareholders, a non-compete arrangement must be separately agreed through a shareholders’ agreement or an equity incentive plan, and is usually coupled with reasonable compensation; otherwise its binding force and enforceability will be diminished.
