The Court of Appeal decision in Guest Services Worldwide Ltd
v Shelmerdine found that a non-compete covenant in a
shareholder agreement was enforceable, even though it only began to
run when the individual stopped being a shareholder. Although this
could theoretically have been many years after the termination of
his employment/ consultancy, the clause was not unreasonable.
Mr Shelmerdine was a shareholder in Guest Services Worldwide Ltd
and also provided services to it as a consultant. His consultancy
agreement, which contained restrictive covenants, expired in 2017.
He continued to provide services to GSW until February 2019 but did
not enter into a new consultancy agreement.
He was also party to a shareholder agreement. This contained
restrictive covenants that applied to "Employee
Shareholders" (as Mr Shelmerdine was) and for 12 months after
someone ceased to be a shareholder. After Mr Shelmerdine stopped
providing services to GSW, GSW took steps to enforce the
