When a shareholder leaves an owner-operated business to strike out on his or her own, disputes over whether business was unfairly taken can result. To avoid such disputes, it is good practice to include a non-competition clause in the unanimous shareholder agreement. This paper provides a review of non-competition clauses generally, as well as in the context of unanimous shareholder agreements, with a particular focus on relevant case law. Additionally, enforcement of non-compete clauses is discussed, including a consideration of the scope of restricted activities, duration, and geographical scope of the restriction.
This paper is part of a collection presented at LESA’s Unanimous Shareholder Agreement Disputes program in Edmonton on April 6, 2016 and in Calgary on April 20, 2016.