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Ben Jones
Ben Jones, UK Lawyer
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I am currently a company director along with 3 other

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I am currently a company director along with 3 other directors. I am intending to leave the company shortly and I have set up another company (approx 12 months ago) that has provided the same service. I have already undertaken a project for a client under the new company. I now have concerns as to whether what I have done raises a conflict of interest and the possible implications of this.
For information whilst I have undertaken a project for this client under my existing company the client came with me from a previous employer.

Hello, my name is***** am a qualified lawyer and I will be assisting you with your question today.

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?

Customer: replied 1 year ago.
hi, i only have a hard copy but there is nothing in my contract relating to conflict of interest. I have worked for the company since February 2010. The new company has been trading since July 2015

OK, thank you for your response. I will review the relevant information and laws and will get back to you at the earliest opportunity. There is no need to wait here as you will receive an email when I have responded. Also, please do not responded to this message as it will just push your questions to the back of the queue and you may experience unnecessary delays. Thank you.

Apologies for not getting back to you sooner, I experienced some temporary connection issues and could not get back on the site until now. All appears to be resolved now so I can continue dealing with your query.

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.

I hope this has answered your query. I would be grateful if you could please take a second to leave a positive rating (3, 4 or 5 stars) as that is an important part of our process and recognises the time I have spent assisting you. If you need me to clarify anything before you go - please get back to me on here and I will assist further as best as I can. Thank you

Customer: replied 1 year ago.
Hi, thank you for your response, however I have already provided services from the new company to a client. Does that mean I have broken my duties? If so what penalties could I expect to receive from the original company?

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.

If your original question has been answered I would be grateful if you could please quickly rate my answer by selecting 3, 4 or 5 starts at the top of the page - it only takes a second to do and is an important part of our process. I can still answer follow up questions afterwards if needed. Thank you

Hello, I see you have read my response to your query. If this has answered your question please take a second to leave a positive rating by selecting 3, 4 or 5 stars from the top of the page. I spend a lot of time and effort answering individual queries and I am not credited for my time until you leave your rating. If you still need further help please get back to me on here and I will assist as best as I can. Many thanks.

Hello, do you need any further assistance or are you happy with the above response? Look forward to hearing from you.

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