Non Compete Clause In Share Purchase Agreement

Non Compete Clause In Share Purchase Agreement Template for Germany

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Key Requirements PROMPT example:

"I need a Non-Compete Clause in a Share Purchase Agreement for the sale of a German software development company, restricting the seller from competing in the EU software market for 2 years from March 2025, with specific focus on protecting our AI and machine learning technology business."

Document background

This document is essential in M&A transactions where a Non-Compete Clause in a Share Purchase Agreement is required to protect the purchaser's investment under German law. It is particularly crucial when acquiring companies where the sellers possess significant knowledge, relationships, or expertise that could threaten the purchased business if used competitively. The document details the scope of restricted activities, geographic limitations, and duration of non-compete obligations, ensuring compliance with German competition law and constitutional requirements. Key considerations include the maximum enforceable duration (typically 2-3 years), reasonable geographic scope, and legitimate business interests justifying the restrictions. The document must be carefully drafted to balance protection of the purchased business with German legal limitations on restricting professional freedom.

Suggested Sections

1. Parties: Identification of the seller(s), purchaser(s), and any key shareholders bound by the non-compete provisions

2. Background: Context of the transaction, business nature, and rationale for non-compete provisions

3. Definitions: Key terms including 'Restricted Business', 'Territory', 'Restricted Period', 'Confidential Information', and other relevant definitions

4. Non-Compete Obligations: Core restrictions on competitive activities, including specific prohibited actions and business areas

5. Duration and Geographic Scope: Temporal and territorial limitations of the non-compete obligations (typically max 2-3 years under German law)

6. Consideration: Specific consideration for the non-compete obligations, if separate from the purchase price

7. Exceptions and Permitted Activities: Specific carve-outs and activities that are allowed despite the non-compete provisions

8. Non-Solicitation: Restrictions on soliciting employees, customers, or suppliers

9. Confidentiality Obligations: Provisions regarding the protection of confidential information and trade secrets

10. Remedies and Enforcement: Consequences of breach, including penalties and enforcement mechanisms

11. Severability: Provisions ensuring partial validity if certain restrictions are found unenforceable

Optional Sections

1. Post-Closing Cooperation: Used when ongoing cooperation between parties is required for business transition

2. Training and Knowledge Transfer: Include when seller's expertise is crucial for business continuity

3. Competing Investments: Include when allowing specific types of passive investments in competing businesses

4. International Application: Required for cross-border transactions affecting multiple jurisdictions

5. Corporate Group Provisions: Include when restrictions need to apply to affiliated companies

6. Independent Contractor Relationships: Used when seller may continue limited involvement as consultant

7. Compliance with Competition Laws: Detailed section needed for particularly large transactions or sensitive markets

Suggested Schedules

1. Schedule A - Restricted Territory: Detailed map or list of geographical areas covered by restrictions

2. Schedule B - Restricted Business Activities: Detailed description of prohibited business activities and sectors

3. Schedule C - Existing Investments: List of seller's existing investments or interests that are permitted exceptions

4. Schedule D - Key Customers and Suppliers: List of specific relationships covered by non-solicitation provisions

5. Schedule E - Consideration Calculation: Details of any specific consideration for the non-compete obligations

6. Schedule F - Permitted Activities: Detailed list of activities explicitly allowed under the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ ��Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Technology

Manufacturing

Professional Services

Healthcare

Retail

Financial Services

Industrial

Software

Consulting

Engineering

Pharmaceuticals

Consumer Goods

Telecommunications

Media and Entertainment

Energy

Relevant Teams

Legal

Corporate Development

Mergers & Acquisitions

Executive Leadership

Finance

Compliance

Business Development

Corporate Strategy

Risk Management

Investment

Relevant Roles

Chief Executive Officer

Chief Legal Officer

Legal Director

Corporate Lawyer

M&A Attorney

General Counsel

Legal Counsel

Corporate Development Director

Head of Mergers & Acquisitions

Business Development Director

Chief Financial Officer

Investment Director

Transaction Manager

Senior Legal Manager

Compliance Officer

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Let's create your Non Compete Clause In Share Purchase Agreement

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