Legal Question in Business Law in California

Can I compete against corporation of which I still own a part?

I am a co-founder of a corporation (let's name it ''Corporation_1,Inc.'' ) and a minor shareholder of it. CEO is major (more than 50%) shareholder. He continiously abused his position by enreaching himself. Non-compete ageement was never signed and there is no non-compete clause in the corporate bylaws. Resently I was terminated without an offer to buy my shares back. Can I open a competing business to a Corporation_1,Inc.? Can I advertise that I was a founder of the Corporation_1,Inc.? Can I approach customers from the Corporation_1,Inc.? If one of the answers is no, than what could happen if I still do it?


Asked on 7/16/04, 8:39 pm

4 Answers from Attorneys
Sheldon G. Bardach Law Offices of Sheldon G. Bardach

Re: Can I compete against corporation of which I still own a part?

Without contractual restrictions, you can do everything you inquired about. There is no, No!

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Answered on 7/16/04, 8:50 pm
Christopher M. Brainard, Esq. C. M. Brainard & Associates - (310) 266-4115

Re: Can I compete against corporation of which I still own a part?

You could get sued for violation of trade secrets. I need to see all of the documents to be sure one way or the other. You may contact me.

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Answered on 7/16/04, 11:37 pm
Daniel King Law Offices of Daniel King

Re: Can I compete against corporation of which I still own a part?

without any agreements, though on its face, it may appear that you may do whatever you wish, you may still be at risk under various theories of unfair competition and/or under some continuing fiduciary obligation you may have. depends upon all the documents you have signed. i would assume that before the majority shareholder dismissed you, he must have been advised one way or the other. proceed cautiously.

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Answered on 7/17/04, 12:39 am
Terry A. Nelson Nelson & Lawless

Re: Can I compete against corporation of which I still own a part?

You have a series of issues that can be addressed. His enrichment may be grounds for action to recover money for the corp and other shareholders. Your firing and stock buyback rights can be negotiated. Your ability to compete, without a specific noncompete agreement, is covered by CA law. You can do some of the things suggested, but there are risks to others. You need substantial specific advice, not generalities. Feel free to contact me if interested in getting thorough advice to keep you out of trouble.

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Answered on 7/18/04, 6:54 pm


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