Directors Service Contracts
As a Director, any person who has this role will have access to confidential information regarding finances, staff and customers. Many businesses employ a number of Directors to assist with the running of their company.
Alongside their role as Director they are also an employee of the business and may also be a shareholder. Despite having multiple responsibilities the majority of Directors do not have adequate documentation in place to ensure a satisfactory outcome should the business relationships diminish.
This can be further complicated if the Director is also a shareholder as their involvement with the business continues. Having this agreement enables the company to set its own rules regarding what should happen in the event of a dispute. Well drafted restrictive covenants can be included in the agreement to prevent the former Director’s future actions negatively impacting on the business.
This prevents the Director from disclosing customer, staffing or financial information to potential competitors. Initially defining terms and outlining the director’s responsibilities is important for all involved.
It can provide a positive start to the business relationship with the newly appointed Director and can help avoid lengthy and costly disputes if and when that relationship comes to an end.
For further information about setting up a director’s service agreement contact SDK Law today.