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Jo C.
Jo C., Barrister
Category: Law
Satisfied Customers: 31300
Experience:  Over 5 years in practice
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We are a small engineering company based in Kent. One of our

Customer Question

We are a small engineering company based in Kent. One of our Directors has breached the Companies Act, his Employment Contract and the requirements of our Articles & Memorandums. The Director in question is the owner of another Company working in a similar environment, however he recently sold his company to one of our biggest rivals without first speaking to our board of Directors or making them aware of the sale before it went through. He now has an employment contract with the our competitor which is a big conflict of Interest issue and causing us much concern and disruption. He hold a lot of our company knowledge on file including all our contract portfolio information which he could pass on to his new employer.
Please can you advise on the steps we should take.
Submitted: 1 year ago.
Category: Law
Expert:  Alex J. replied 1 year ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
Does he have non compete restrictions in his employment contract?
Do you want to sack him?
Kind regards
AJ
Customer: replied 1 year ago.
No he does not have a non-compete clause in his contract.
Yes we don't need to remove him as both an employee and a director, but are wary as to how we go about this in the correct manner.
There is another complication in that he is a shareholder, so we obviously want him to sell back his share.
As he has clearly broken the Law (Companies Act clause 175) "Conflict of Interest" as below:-175 Duty to avoid conflicts of interest
(1) A director of a company must avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company.We are looking for advice as to who we should report this too, if we can get free/low cost legal assistance or if we can take out an insurance to cover any possible legal fees should this process end up in court.
Expert:  Alex J. replied 1 year ago.
Hi,
Thank you.
Do you have a process for disciplining staff?
Have you signed a shareholders agreements?
What percentage of shares does he own?
kind regards
AJ