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Commentary

134 Restrictive covenants

COMPANIES vol 11 acquisitions, mergers, demergers
| Commentary

134 Restrictive covenants

| Commentary

134 Restrictive covenants

Share sale agreements usually include clauses which seek to prevent the sellers from damaging the goodwill of the target company’s business after completion. These clauses typically provide that sellers will not:

  1. 134.1

        compete with the business of the target company;

  2. 134.2

        solicit trade from, or deal with, the target company’s customers or suppliers;

  3. 134.3

        solicit the services of any employee or director of the target company; or

  4. 134.4

        disclose or misuse any confidential information relating to the business of the target company.

Broadly, these clauses will only be enforceable under the law on restraint of trade if they

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