The Company Law stipulates the non-solicitation obligation. The Company Law prohibits employees from performing certain, legally prescribed functions in another company that is considered competition, without obtaining consent. This prohibition applies to the so-called – persons with special duties towards the company.
Who is a person with special duties towards the company?
Special duties towards the company in limited liability company have:
1. Members of a limited liability company that have a significant stake in the company’s share capital (with more than 25% of the voting right in a company) or a member of a limited liability company that is a member of the controlling company;
2. Directors, members of the Supervisory Board, representatives and procurators;
3. Liquidation manager.
Under the Founding Act of the LLC, other persons may also be designated as persons with special duties towards the company.
Thus, if you are a person with special duties towards a company, without any prior consent, you cannot:
– Serve in the capacity of a person with special duties in a competing company,
– Work as an entrepreneur, with the same or similar activity,
– Be employed in a competitive company,
– Be engaged in any other capacity in a competing company,
– Be a member or a founder of a competing company.
The reason behind the non-solicitation clause is that if certain persons in a company (with special duties towards company) would perform certain functions or have a certain status in a competing company, that would be considered contrary to the principle of the freedom of competition.
So, if you would like to be a member of a different company that has over 25% stake, you would need to obtain the consent from the company in which you first acquired the status of a member of the company. The same practice applies if you wanted to start a business as an entrepreneur or if you wanted to be a director, member of the Supervisory Board, representative or a procurator.