Enticement and Competition (D&O)
Non-compete agreements in German Corporate Law
Non-compete agreements play an important role in German Corporate Law. This is particularly true in regard to CEOs, directors, officers, board members, commercial agents and partners (in a German joint-stock company – Aktiengesellschaft – AG, a German cooperative – Genossenschaft – eG, a German limited liability company – GmbH or a German partnership (KG, OHG, PartG, PartGmbB, GbR). On the one hand the CEO, directors and board members are bound to contractual agreements, the articles of association, the by-laws, their duties of loyalty and German statutory Corporate Law – and breach of these provisions can have legal consequences. On the other hand, there is statutory Competition Law that might be the basis for legal measures.
Non-compete and competition clauses in ongoing official and contractual relationships in Germany
Under German Corporate Law, it can be distinguished between competition disputes in an ongoing relationship and post-contractual competition disputes. In an ongoing business relationship a competition dispute will typically raise the question of the removal of the CEO, director, officer or board member. Besides, claims for damages and cease and desist orders might be enforced under German Corporate Law in the event of a violation of competition regulations.
Post-contractual non-competition agreements under German Corporate Law
Even more relevant under German Corporate Law, however, are post-contractual non-competition agreements, which are often carried out as customer protection or client protection agreements. Surprisingly, most of the non-compete agreements used in practice are not binding by the standards of German Corporate Law. The German Courts seek to find a fair balance between the legitimate interests of the company to protect specific expertise and customer relationships on the one hand and the freedom of occupation of the retired CEO, director, officer, board member, commercial agent or partner on the other. Depending on the concrete type of contract the business has to pay at least 50 % of the last remuneration owed to the CEO, director, officer or commercial agent to make a non-compete agreement binding under German Corporate Law.
Enforcement and defense litigation regarding non-compete agreements under German Corporate Law
In practice, many businesses combine the different approaches and proceed on the basis of both, Contractual and Corporate Law as well as Unfair Competition Law against the violation of competition rights. Depending on the specific interests involved a cease and desist order or damages are typically sought. Another advantage of such concerted action is often to force the other side to spend time and money in defending a claim – this usually reduces the profitability of a competitive action significantly. In contrary, the aim of the CEO, director, officer, commercial agent or partner is typically to either prove that a non-compete is not binding or to claim allowance payments.
Corporate Lawyer in Germany
Our German qualified Corporate lawyers will enforce your claim against CEOs, directors, officers, board members, partners and commercial agents based on non-compete provisions or will defend you against such claims. German Attorney at Law Dr. Christian Hendrik Zeller provides practical legal advice at the overlaps of German Corporate Law and German Labor Law. Attorney Dr. Zeller provides courtroom representation for you before all German Higher Courts and Appeal Courts.
Please contact our law firm 24/7 via phone (+49 (0) 69-58 80 972-40) or email (firstname.lastname@example.org ). You may also contact us by filling out our contact form. Kindly also see our 24/7 access on the left and take the opportunity to book a cost-free initial consultancy appointment with a German Corporate Lawyer. You may further request a call-back within 24 hours or live-chat with our German law firm. We look forward to hearing from you. Google
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