Director resigned: confidentially question

[tallblonde]

Hi,
My Co director resigned last week
It's now come to light he has shared confidential company information.
He's obviously refusing to sign a confidentially agreement now.
It's now become clear he's taken copies of all company info.
What documents do I have a right to ask him to delete from his system?
And any tips on what I can do to help this happen?

 

[Ozzy]

Was there any employment contract or a director service agreement in place? I’m assuming not but asking because if so they usually cover this stuff.

If not then you may need to get a solicitor to threaten them.

 

[Mark T Jones]

Who is the data controller?

What is the nature & medium of the info they have taken?

 

[Chris Ashdown]

Is he joining another company or starting his own
When did he take this information, as his duty as a director or after he resigned
Is he still a shareholder in your company
Not sure if any of the above is relevant but just things that could maybe make a difference, Data learnt whilst working a a director cannot be unlearnt as it was a directors job to fully understand the company.
Assuming this is a Limited company as sometimes the word director is misused by partnerships

 

[tallblonde]

Was there any employment contract or a director service agreement in place? I’m assuming not but asking because if so they usually cover this stuff.

If not then you may need to get a solicitor to threaten them.

There was no director service agreement in place.

Was there any employment contract or a director service agreement in place? I’m assuming not but asking because if so they usually cover this stuff.

If not then you may need to get a solicitor to threaten them.

There was no agreement in place.
Thank you

 

[tallblonde]

Who is the data controller?

What is the nature & medium of the info they have taken?

I set up Dropbox and shared access with him.
All infornation was stored on there.
When I ended his access on resignation I could see he had accessed everything that had been recently updated.

 

[tallblonde]

Is he joining another company or starting his own
When did he take this information, as his duty as a director or after he resigned
Is he still a shareholder in your company
Not sure if any of the above is relevant but just things that could maybe make a difference, Data learnt whilst working a a director cannot be unlearnt as it was a directors job to fully understand the company.
Assuming this is a Limited company as sometimes the word director is misused by partnerships

He already has his own company I'm a similar industry but not in direct competition.
He accessed the recent information after he resigned.
He's no longer a share holder.
It was a Limited company.

When I asked him to agree or jointly Drayton a confidentiality agreement, he said no because he'd already disclosed information.
I replied that he had a duty of confidentiality to the company...and his repsonse was nodody him told him that and he denied any knowledge or responsibility of his duty as a director.
It's a real mess.
I feel very stupid to be in this mess...I had clearly misjudged him.

 

[Mark T Jones]

I set up Dropbox and shared access with him.
All infornation was stored on there.
When I ended his access on resignation I could see he had accessed everything that had been recently updated.

That just tells us that he accessed information that was available to him.

You mentioned copies - what form did they take?

There might be an argument if you can prove they actually took information away physically (though it will be challenging) - you have no call over what is in their head - or TBH on their mobile or laptop.

You might be able to exercise some limits on how they use the information. (again, it won't be easy)

 

[tallblonde]

That just tells us that he accessed information that was available to him.

You mentioned copies - what form did they take?

There might be an argument if you can prove they actually took information away physically (though it will be challenging) - you have no call over what is in their head - or TBH on their mobile or laptop.

You might be able to exercise some limits on how they use the information. (again, it won't be easy)

It appears he make electronic copies of everything that had been recently updated including the up-to-date book-keeping, client information, and other more mundane daily activity.

Can I ask him to removed them from his devices/storage?

 

[Newchodge]

It appears he make electronic copies of everything that had been recently updated including the up-to-date book-keeping, client information, and other more mundane daily activity.

Can I ask him to removed them from his devices/storage?

It is for him to make sure he understands his duties as a director and confidentiality is one of them. I think you need to speak to @The Resolver who is around here sometimes.

 

[Ozzy]

I replied that he had a duty of confidentiality to the company...and his repsonse was nodody him told him that and he denied any knowledge or responsibility of his duty as a director.

Ignorance is no excuse here, and he will have no defence in any court. When someone becomes a director Companies House writes to them informing them of their duties, and the law expects everyone who becomes a director to educate themselves of their duties. They have no defense here.

However, as already stated, will have a tough job proving what they may or may not have done with the data.

In my opinion, the best bet would be spending a few quid on a threatening legal letter from a solicitor to send a shot over their bow. Others may disagree.

 

[IanSuth]

Also there is a legal gdpr duty regarding confidential information

Depending on what is contained - for instance if you had a list of customers names and personal mobile numbers, that is covered. Company names and switchboard extensions less so

 

[tallblonde]

Also there is a legal gdpr duty regarding confidential information

Depending on what is contained - for instance if you had a list of customers names and personal mobile numbers, that is covered. Company names and switchboard extensions less so

Thank you.
Am I within my rights to ask him to delete company information from his devices?

 

[tallblonde]

Ignorance is no excuse here, and he will have no defence in any court. When someone becomes a director Companies House writes to them informing them of their duties, and the law expects everyone who becomes a director to educate themselves of their duties. They have no defense here.

However, as already stated, will have a tough job proving what they may or may not have done with the data.

In my opinion, the best bet would be spending a few quid on a threatening legal letter from a solicitor to send a shot over their bow. Others may disagree.

Thank you.
Am I within my rights to ask him to delete company information from his devices?

 

[WaveJumper]

Obviously already all good advice above, next time round (if there is one) pretty sure you will ensure you have covered your backside with all the relevant agreements. In the meantime you could spend a lot of time and effort chasing this one down, so my question, is this going to effect your current business going forward.

Don't let his leaving totally distract your focus on the business and moving it forward, sounds like you are better off with out him

 

[Newchodge]

Thank you.
Am I within my rights to ask him to delete company information from his devices?

You can ask him whatever you like. You can ask him to fly to the moon. You need legal backing to make him comply.

 

[tallblonde]

If I decided to get legal advice, who or which kind of firm would I need to look for?
I know this can't be answered, but I'm wondering if it would be beneficial or a waste of time and money?

 

[JEREMY HAWKE]

You can ask him whatever you like. You can ask him to fly to the moon. You need legal backing to make him comply.

I agree Cyndy The ex director has to fulfil his legal obligations as a director only . Where company details are concerned this would only effect the data of private customers and employees under the data protection laws . Any other "top secrets" he can do what he wants with if he has signed no previous agreements

Once again another example of the reasons why new formations should always follow the advice on this forum This is a subject that comes up regularly

Get a solicitor to draw up legal agreements at the beginning and not when its too late

 

[Mark T Jones]

If I decided to get legal advice, who or which kind of firm would I need to look for?
I know this can't be answered, but I'm wondering if it would be beneficial or a waste of time and money?

One thing I'd always say before going legal is 'make sure the lawyers don't win'.

By all means fire off a legal letter - any lawyer specialising in business law will do that for a fee.

After that, ask yourself, how much damage can they actually do with the stored information (as opposed to what they already knew). In most cases, the answer is very little.

If there is a specific area of potential risk, isolate it and address it.

 

[Deleted member 281791]

Hi,
My Co director resigned last week
It's now come to light he has shared confidential company information.
He's obviously refusing to sign a confidentially agreement now.
It's now become clear he's taken copies of all company info.
What documents do I have a right to ask him to delete from his system?
And any tips on what I can do to help this happen?

Absolutely nothing you can do. I would take this as a life lesson. Confidentiality clauses should have been signed if required when they joined. Not asked to sign after they have left.

Let them do their own thing and you do yours. Learn and move on. Don’t waste your energy or time on it any further.

 

[Newchodge]

It doesn't look as if @The Resolver has been around yet. I have copied his signature line from one of his recent posts: (I hope you don't mind, Graham).

Graham Ross, lawyer and shareholder dispute negotiator/mediator -07885 728801. www.BoardroomResolve.com . Advising here for over 16 years. Book a 30mn Free advice call

 

[tallblonde]

It doesn't look as if @The Resolver has been around yet. I have copied his signature line from one of his recent posts: (I hope you don't mind, Graham).

Graham Ross, lawyer and shareholder dispute negotiator/mediator -07885 728801. www.BoardroomResolve.com . Advising here for over 16 years. Book a 30mn Free advice call

Thank you

 

[IanSuth]

If relevant some kind of legal letter pointing out any GDPR/DPA liabilities if he has taken/copied that kind of data and basically saying he now has legal responsibility for protecting/deleting that data might scare him into action.

That isn't a threat that you are going legal - it is a notification that he now has a legal liability hanging around his neck by having the data in his possession

You may even have a legal requirement to inform the ICO if there is a relevant breach - https://ico.org.uk/for-organisations/report-a-breach/

 

[tallblonde]

If relevant some kind of legal letter pointing out any GDPR/DPA liabilities if he has taken/copied that kind of data and basically saying he now has legal responsibility for protecting/deleting that data might scare him into action.

That isn't a threat that you are going legal - it is a notification that he now has a legal liability hanging around his neck by having the data in his possession

You may even have a legal requirement to inform the ICO if there is a relevant breach - https://ico.org.uk/for-organisations/report-a-breach/

Thank you

 

[Gecko001]

He presumeably could have taken the information before he resigned and kept it on a memory stick and not told you about it. Does taking it after he resigned change things in practical terms? He could do just as much or as little damage to you if he took it before he resigned I should have thought.

In saying that perhaps you should actually try to put a price on the damage he could do you. You say he will not be a competitor, so perhaps the damage will not amount to much or anything at all in terms of costs to you or your business.

 

[tallblonde]

He presumeably could have taken the information before he resigned and kept it on a memory stick and not told you about it. Does taking it after he resigned change things in practical terms? He could do just as much or as little damage to you if he took it before he resigned I should have thought.

In saying that perhaps you should actually try to put a price on the damage he could do you. You say he will not be a competitor, so perhaps the damage will not amount to much or anything at all in terms of costs to you or your business.

I know when I resigned as a director in the past I was made to delete all copies of documents made while I was a director.
I understood that was standard practice. Is that not so?

 

[Chris Ashdown]

I know when I resigned as a director in the past I was made to delete all copies of documents made while I was a director.
I understood that was standard practice. Is that not so?

Most of the data will get old quite quickly and of little use to other companies, but the data in his / her head may be far more useful to someone else, something like what they learnt about failure of things they have tried and the successes. basically what works and what works so you don't have to re-learn the failures again

 

[The Resolver]

You describe the information as "Confidential company information" Can you be a bit more precise? Does it include personal information of clients/prospects etc (includnig email addresses) in which case breach of privacy is involved and you must take action and report.

As a Director it looks like he would have breached his duties under s172 of The Companies Act 2006 - which covers (note those in bold) :-

​

(1)A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to—

(a)the likely consequences of any decision in the long term,

(b)the interests of the company's employees,

(c)the need to foster the company's business relationships with suppliers, customers and others,

(d)the impact of the company's operations on the community and the environment,

(e)the desirability of the company maintaining a reputation for high standards of business conduct, and

(f)the need to act fairly as between members of the company.

I;ld like to know more about the potential damage caused but if there has been then the company can sue him to compensate for damage/losses as a result. A court would likely order him to remove what he has, but the benefit to the company must be enough to justify the cost (not insignificant)

If some of the data is companies in your supply chain you might consider contacting them to explain and incur them to let you know if the ex-director contacts them

The problem with instructing a solicitor to send s threatening letter is that if you are not prepared to fund the case in court then your bluff would have been called.

Apart from personal information being taken, you need to really assess the actual damage commercially to your business.

 

[The Resolver]

… I should add that taking action to report him for disqualification as a director may give him more to worry about.

 

[Tomwirral]

Hi,
My Co director resigned last week
It's now come to light he has shared confidential company information.
He's obviously refusing to sign a confidentially agreement now.
It's now become clear he's taken copies of all company info.
What documents do I have a right to ask him to delete from his system?
And any tips on what I can do to help this happen?

In Law unless you have some kind of agreement that has been signed then am afraid he can share anything he wants. I understand this is not what you want to hear but it’s why people take out pre nuptial agreement’s - people are very unpredictable and often problems arise. My best advice is to speak to your co- director and ask them not to share further information and if they do and it comes to light that this has directly impacted the company then you will be taking legal action. We do hope that we do not have to take this course of action, but if necessary we will be making a claim against you in the country court to recover our costs and will be asking for future damages to be considered - your liberty will increase. Send them a Cease and Desist letter by registered post. This may stop them but if not it can be used in evidence

 

[Ozzy]

but it’s why people take out pre nuptial agreement’s

The OP is asking advice about their business partner, not their marriage partner.

 

[Tomwirral]

The OP is asking advice about their business partner, not their marriage partner.

Pre nuptial was an example

 

[tallblonde]

Thank you everyone.
I've learnt a great deal from this process.
He left 2 weeks ago.
Without having an NDA signed at the start, I can't control what he does.
However i can control what I do.
I am using my energy and focus on continuing to make the business the best it can be.
It has had a good reputation in the local area for the last 4 years.
I'm focusing on continuing that going forward.

If anyone is reading this who is at the start of their business, get an NDA and SLAs in place!

Thank you everyone.
I appreciated your messages and benefitted from having a sense of support alongside some hard factual information.
Warm wishes,
S

 

[Ozzy]

I appreciated your messages and benefitted from having a sense of support alongside some hard factual information.

Thank you for posting the update, and I wish you every success going forward and growing the business.

 

[WaveJumper]

Thank you everyone.
I've learnt a great deal from this process.
He left 2 weeks ago.
Without having an NDA signed at the start, I can't control what he does.
However i can control what I do.
I am using my energy and focus on continuing to make the business the best it can be.
It has had a good reputation in the local area for the last 4 years.
I'm focusing on continuing that going forward.

If anyone is reading this who is at the start of their business, get an NDA and SLAs in place!

Thank you everyone.
I appreciated your messages and benefitted from having a sense of support alongside some hard factual information.
Warm wishes,
S

Great update, onwards and upwards wishing you all the best