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Would it be possible for me to see a copy of your contract please? If it is not available for me to see, could you please tell me whether there is any clause within it in relation to this? Please could you also tell me how long you have worked there for?
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You will potentially be restricted in two separate ways – under your fiduciary duties as a director and under any restrictive covenants in your contract.
There is a principle in law known as ‘fiduciary duties’. These are implied duties that one person owes to another where a specific relationship of trust and confidence exists.
Under equity, directors owe fiduciary duties to their companies under the Companies Act 2006. These duties can be summarised as follows:
· No conflict – you must not place yourself in a position where your own interests conflict with those of the other party or where there is a real possibility that this will happen.
· No profit - you must not profit from your position at the expense of the other party.
· Undivided loyalty - you must not place yourself in a position where your duty to another customer conflicts with your duty to the other party.
· Confidentiality - you must use or disclose information obtained in confidence from the other party for their benefit only.
The fiduciary duties only last whilst there is an ongoing relationship between the parties so once this relationship has terminated, the duties will no longer apply. Instead, if one party wishes to continue imposing some restrictions on the other, they must rely on specific restrictive covenants that are included in a written contract between the parties.
If there are no restrictive covenants in your contract that specifically deal with this situation then as long as you do not breach the fiduciary duties, once you leave you would be allowed to do as you have proposed.
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There are several options that a company can use in the event of a breach of fiduciary duties These are:
· Injunction – for example a court order preventing you from doing something, like dealing with this client
· Account of profits – this would apply when you have been unjustly enriched at the expense of the company, for example, where you have received money belonging to the company, but this is not the case here
· Damages – you could be liable to the company if they suffer loss as a result.
· Disciplinary proceedings - you could be liable to disciplinary proceedings from the company or an appropriate regulator.
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