In general, non-competition prohibitions do not apply in California, as stated in california Business and Professions Code Section 16600, which states that “[e]xcept, as stipulated in this chapter, any contract by which a person is required to practice a legitimate profession, trade or business of any kind is void.” There are a few limited exceptions to this rule. One of these exceptions is when a business owner sells the value or interest of the business. Paragraph 16601 of the Business and Professions Code states in part that “any person who sells the good-in of a business or any owner of a business who otherwise sells or sells all of his or her ownership shares in the commercial entity may agree with the purchaser to refrain from a similar transaction in a specific geographic area. This provision contains three important factors that need to be carefully considered and clearly defined: the entity, the good value and the impact of these activities within a given geographic site. A non-compete clause, often referred to simply as a non-compete clause, is a provision of your enterprise agreement that prevents an employee of the company from performing similar transactions that directly compete with the company. In most cases, the non-compete clause came into force with the termination of the employment relationship. In addition, the non-compete clause may prevent the member from recruiting LLC employees, customers or customers for transactions if provisions do not require it. Non-competition obligations are generally effective for the duration of the relationship with the LLC and for a period of time after the end of the relationship. Adapting your business agreement is essential to protect your business interests. One of the most important provisions you want to consider to protect your business is a non-compete clause. Section 17100 (c) of the California Corporation Code states that “the enterprise agreement [of a limited liability corporation] may provide for the termination, in whole or in part, of the interest of membership or the economic interest of a member of the limited liability corporation.” The same section also provides that if a member`s interest in the limited liability company is thus “terminated,” the member is entitled to a return of his or her initial contribution.
In other words, as Parliament uses in parts of the California Corporations Code for limited liability companies, a “cessation” of a member`s interest (1) is an event defined in advance by the enterprise contract (. B, for example, expulsion of cause); (2) in which the member`s property may be extinguished involuntarily; and (3) where the member is not entitled to more than his initial contribution to society.