Exit plans, directors, shares and fighting for your life!

[IanSuth]

I am posting these without comment as articles which may give you some backgrounder on Linkedin account/contact ownership - both are written from the point of view of telling companies how to protect from employees leaving with contact info

Legal lowdown: Who owns LinkedIn contacts? - HR Magazine

What employers can do when an employee leaves the business with a valuable list of connections on a personal LinkedIn account

www.hrmagazine.co.uk

LinkedIn, information ownership and the law

Employers often argue that contacts made during the course of employment should form the company’s intellectual property and/or its confidential information.

www.hcrlaw.com

and here is one from a different slant

Who actually owns your LinkedIn profile?

Your LinkedIn profile, contrary to LinkedIn's own user agreement found here and in the video below your profile may actually belong to your employer (along with the connections within it). No, this is not a joke.

www.linkedin.com

 

[NickGrogan]

There are only maybe 5 clients that I would need to contact, and similar for my colleague. We would not need to download a database, or even need to really keep their numbers on our mobiles. I'm pretty sure we could remember 5 names and just call the company up and ask to speak to them. With the fact that we have never let them down and managed everything, there would be no reason why they would not at least speak with us as we have a great relationship.

What does your employment contract say? Even without a contract, the fact that you're a director is far more limiting.

Company protects its business from poaching by former director - Berry Smith

A businessman has failed in his attempt to overturn an injunction preventing him from competing with his former company and trying to poach its customers. The court heard that the businessman had been both a director and a shareholder of the company until 2013 when his employment was...

www.berrysmith.com

"Under section 175(1), a director must ‘avoid a situation in which they have, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company’. Under section 175(2), this applies in particular to ‘the exploitation of any property, information or opportunity’, whether or not the company could take advantage of that property, information or opportunity.

As already noted, when a person ceases to be a director of a company, the general rule is they cease to owe any duties to the company. However, section 170(2) states that certain duties continue to apply after a person ceases to be a director. These include the duty to avoid a conflict of interest in section 175, but only ‘as regards the exploitation of any property, information or opportunity of which the person became aware at a time when they were a director’."

"his subsequent use of knowledge gained while a director of TTL .... did amount to a failure to avoid conflicts of interest."

Directors’ duties after resignation - SAS Daniels

Can directors’ duties still be applied after resignation? Matthew Canfield explores a recent case in which a director was alleged to have breached his duties after he had left the company.

sasdaniels.co.uk

Resignation does not grant a former director a complete "free pass" as regards their duties to the company. The director must remain cognisant of the interests of the company and must act accordingly, having due regard to those interests. That is not surprising and is not difficult to understand. One can easily see for example that a person in possession of a company's commercially sensitive information where that information was received in the capacity of director, should only ever use that information for the purposes of the company. And once a director has resigned, they cannot have a legitimate reason for using such information. The information had been received by the director subject to an obligation of trust (and that is what the fiduciary duty means, it is an obligation to act in the utmost good faith towards the company. The word "utmost" is key here, the duty is a high and onerous one).

Trusted Legal Advisers in Scotland

MFMac (Morton Fraser MacRoberts) stands as a leading Scottish law firm offering clear, practical legal advice backed by transparent, tailored solutions.

www.morton-fraser.com

The Clients are not your clients, they are the company's clients.

You cannot contact legally contact them without breaching GDPR and your duties as a director.

3 people have said this now, yet you're still asking.

How will these clients feel about you trying to shaft your previous employer?

Will they see you as professional, honest, and trustworthy? It depends a bit on the service and sector.

In some markets, they'd take you for a drink to celebrate, in others, they'd never deal with you.

 

[Beaniecheese]

3 people have said this now, yet you're still asking.

And other people have a different take. If you don't like people asking questions, why are you here!?

At the end of the day. My current director role is a farce. The other directors have made decisions underhand which would annoy the rest of the team and if/when they find out will cause major issues.

The route the MD is wanting to take the business does not align with my own. And I feel will hinder the business. I'm sure your answer to this will be that the MD can do what he wants. Well yes he can and he is now. But considering the 23% growth year on year since I joined us down to me. You'd think he would of learned to trust in my plan by now and not jeopardise it.

And I'll be damned if I'm staying while the ship sinks.

So I'll leave without data apart from what I have in my brain and my linked in account. Which was mine 10 years prior to working there. Start my own business and build my own database. There's plenty of work out there and there are plenty who will only want to deal with my colleague and I, regardless of what happens with the other company.

 

[MBE2017]

There's plenty of work out there and there are plenty who will only want to deal with my colleague and I, regardless of what happens with the other company.

That is 100% correct, best of luck. Start afresh, be in control of your own destiny.

 

[The Byre]

a person in possession of a company's commercially sensitive information where that information was received in the capacity of director, should only ever use that information for the purposes of the company.

Sensitive information would be something like a secret formula for a new type of glue or sealing compound - or perhaps key knowledge gained by expensive research. The name of key clients known to the whole market hardly falls into the category of 'sensitive'.

The Clients are not your clients, they are the company's clients.

No. Let's look at that sensibly - I want you to imagine that you are making large format sensors for movie cameras. There are about ten makers of movie cameras on Planet Earth and every person working in the movie business knows their names. They even go to the trade fairs and therefore know the names of the key people - engineers, sales, buyers, managers, the lot!

The names of key players in an industry or even just in a region is hardly privileged information and certainly does not belong to any one company! For example, knowing everyone who runs a recording studio in or around Manchester will be known to everyone in that industry. There are even online lists of such people (and like me, they are broken down by age and sex).

You cannot contact legally contact them without breaching GDPR and your duties as a director.

GDPR is to protect private individuals and not to protect the name of businesses.

Contacting known key people in an industry that are known to everybody hardly conflicts with previous obligations as a director.

HOWEVER

If @Beaniecheese is selling to private individuals and not to businesses AND the names of those individuals is not common knowledge (e.g. confidential clients with special requirements, such as secret collectors of fine art) then he would indeed be using privileged information AND could be in breach of GDPR.

It's all down to the details of the case!

 

[Beaniecheese]

If @Beaniecheese is selling to private individuals and not to businesses AND the names of those individuals is not common knowledge (e.g. confidential clients with special requirements, such as secret collectors of fine art) then he would indeed be using privileged information AND could be in breach of GDPR.

Selling to brand managers, and marketing managers of SME's.

 

[The Byre]

Selling to brand managers, and marketing managers of SME's.

F-all to do with GDPR.

Would a person working in that industry and that region know who the brand and marketing people are?

If yes, then you are OK.

If no, then you are less OK.

If you brought them to the Old Co and you knew them before you were with Old Co, then you are "green and clear!" (Fifth Element).

As always, details - and as Goethe wrote in Faustus - therein lies The Devil!

 

[Beaniecheese]

Would a person working in that industry and that region know who the brand and marketing people are?

Possibly. LinkedIn certainly informs us with most companies, or a quick phone call to find, out as they're certainly not protected by a gate keeper.

 

[NickGrogan]

Possibly. LinkedIn certainly informs us with most companies, or a quick phone call to find, out as they're certainly not protected by a gate keeper.

Names, maybe - as you say LinkedIn can be a good source.

Emails and personal mobile numbers - the kind of data most people store on a phone - not so much.

Leaving Your Job? Don’t Take Personal Data With You Warns ICO – GMA

The ICO has warned those retiring or taking a new job that employees can face action if they retain information collected from their previous employment.

www.gmal.co.uk

 

[Beaniecheese]

Emails and personal mobile numbers - the kind of data most people store on a phone - not so much.

The company phone number is available, which I why I mentioned there being no Gatekeeper!

 

[DontAsk]

Leaving Your Job? Don’t Take Personal Data With You Warns ICO – GMA

The ICO has warned those retiring or taking a new job that employees can face action if they retain information collected from their previous employment.

www.gmal.co.uk

That's all about personal details of individuals.

Contact details for companies and other legal entities are not covered by GDPR. Not sure how business details for a sole trader (an individual) would treated but if they have explicit business contact phone and e-mail, etc., then I would argue you are OK.

Keeping a list of business contact numbers, and taking it with you, is fine. Actually contacting them to procure orders may be in breach of your current contract if it includes a non-compete clause.

 

[Newchodge]

That's all about personal details of individuals.

Contact details for companies and other legal entities are not covered by GDPR. Not sure how business details for a sole trader (an individual) would treated but if they have explicit business contact phone and e-mail, etc., then I would argue you are OK.

Keeping a list of business contact numbers, and taking it with you, is fine. Actually contacting them to procure orders may be in breach of your current contract if it includes a non-compete clause.

There is usually a confidential information clause relating to information acquired through your employment.

 

[DontAsk]

There is usually a confidential information clause relating to information acquired through your employment.

Yes, good point, but it's still not in the purview of GDPR or the ICO, as some seem to think, unless it's personal info.

 

[Mr D]

I'm a bit confused. Surely as a Director I have every right to resign and start up another company in competition! I see this happening all the time in business.

I'm not leaving a failing business, it's doing very well. I just do not like the direction it is now going, or the fact that as a Director I have been left out of Directors meetings, when the other directors have issued shares to their family. As far as I can see issuing shares without the other directors being aware is a breach as well as failing to list absentee directors.

I have considered stepping down as a Director now, to resign in January after I get dividends. However, I cannot imagine for one minute that me stepping down won't be anything but transparent that I clearly want to leave, and might complicate things even more.

Regarding GDPR. Can I not simply message every contact and ask them if they want me to remove their details on my personal phone as I will be leaving the business?

Was this the shareholders issuing new shares? Or transferring some of their existing shares?
Issuing new shares would also mean you have option to buy more of the shares to maintain your percentage shareholding at same level?

 

[Mr D]

OK, let's go through the issues here one at a time -


Tip - if you leave, be as friendly and amicable to all parties as possible and tell customers that you and the old company part as friends. i.e. leave any bad-mouthing to others.

P.S. Good Luck - whatever you decide to do!

Yes very good tip. When I left an employer the manager bad mouthed me across the region to all her contacts. Sadly for her I was quite experienced and many of her contacts had come across me regularly. And I'm far more friendly and willing to help others than she ever was.
Effectively she advertised my new business far better than I could as a new startup, letting everyone know I was a free agent able to take on work.

People make their own decisions based on experience. Good experience counts.

 

[Beaniecheese]

Was this the shareholders issuing new shares? Or transferring some of their existing shares?
Issuing new shares would also mean you have option to buy more of the shares to maintain your percentage shareholding at same level?

So the story as I was told was that the the more senior director(MD's dad) had put in £40k without authorisation of the MD. The MD did not want the £40k in the business so decided to give the investment to his kids (4 kids at £10k each). He did not mention his kids were getting shares at any point. My colleague found out recently that the four kids have Class B non voting shares. The staff have Class C, and I have Class C and Class D. Only the MD and his Dad have Class A Voting Shares. I don't know if that helps?