Legal Question in Business Law in India

I was hired as the chief executive for a internet based start up firm. My agreement states a Non compete clause with a cool off period of 2 years. However, the business still has not kicked off(still in development stage) and the promoter does not intend to execute if I quit. If I were to start off a firm that operates on a similar business model, am I liable to the promoter? Are NCs valid in India? I have been with the firm for the last 1.5 years and have not drawn a salary, instead agreed to equity. (Shares have not yet been drawn out)


Asked on 2/11/15, 11:02 pm

1 Answer from Attorneys
Fca Prashant Chavan Expert Edge LLP

12.02.2015

Dear Sir / Madam,

The terms and conditions of your contractual Agreement with the Promoter needs to be considered and relied upon to know whether the cool of period is from the date of your joining the firm or from some other specific date. Be prepared to get nothing in return from the promoter of the existing start-up firm should you quit, since the firm is still in the nascent stage. I know of NCDs (Non-Convertible Debentures); I am unable to comprehend what you mean by NCs that you are referring to, so I cannot speak on validity. If the promoter does not pay you either in the form of salary nor equity, I see no way in which the promoter can hold you liable if you start off your own firm.

Regards,

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Answered on 2/12/15, 9:06 am


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