Although they were referred to as “salaried shareholders”, the persons covered by the contract were limited because of their shareholder status and not their employee status, with restrictions applied over the following periods: the issues were made difficult by the division of the parties to the shareholders` pact into two groups, shareholders and salaried shareholders. Only the latter, including direct staff, directors and representatives of GSW, were subject to restrictive agreements. Therefore, the clause that those who fall within the definition of the salaried shareholder remain below their limits until they have more shareholder activity and twelve months later should be correctly interpreted. This interpretation was consistent with the transmission provisions of the sections, since a person who was no longer the director, staff or agent would no longer be a shareholder very quickly. According to the Court of Appeal, a sensible person would have read these provisions in this way. There was no question that S had not yet concluded the transfer of its shares in this case. For this reason, workers who receive shares should closely respect the terms of any agreement reached in a shareholders` pact and not expect the same principles to be applied as if they were national alliances in an employment contract. From the point of view of a salaried shareholder, the search for restrictive agreements should include both the shareholder contract and the employment contract. It`s something Gannons would like to help you.
The Court of Appeal found that the duration of the restrictive agreements was reasonable and did not constitute an unlawful trade restriction. Given the particular nature of the business and the likely knowledge of the salaried shareholders, it was clear that the company had a legitimate interest in preventing salaried shareholders from competing with the company and recruiting customers. A 12-month retention period was entirely reasonable to protect these interests. This was the case, although this was sufficient from the moment when the person was no more a shareholder than the termination of his employment or agency. Although the court recognized that it was possible to delay the process of waiving the company`s shares, it did not find the clause inappropriate, given that the possibility of significant delays, which generate controversy, or the extreme and highly unlikely possibility that a shareholder could be imprisoned indefinitely. In Guest Services Worldwide Ltd/Shelmerdine [2020] EWCA Civ 85, the Court of Appeal considered a shareholders` pact containing clauses prohibiting employee shareholders from competing with the company and recruiting customers, employees and suppliers both during their employment and for a period of 12 months after they were no longer shareholders. With regard to duration, although the Restrictive Confederation constitutes a restriction on trade, the Court of Justice found that a 12-month delay was not inappropriate in finding that “the company had a legitimate interest in preventing salaried shareholders from competing with their activities”. The Tribunal also found that both the company and Mr. Shelmerdine were experienced business parties, so that there was no imbalance in bargaining power and that at that time it would have been considered that any employee who is no longer employed would probably no longer be a shareholder at the same time or shortly thereafter.