The statutory non-compete duty binds a managing director, not a shareholder. A shareholder may therefore operate in the company’s sector or hold a stake in a competitor unless the memorandum or articles impose a restriction. The law expressly allows the company to extend the duty to shareholders, but without such terms they are not bound.
Does the non-compete duty bind shareholders too?
The non-compete duty in Section 136 of the Commercial Code is directed at managing directors. A director must not, in particular, enter into transactions related to the company’s activities in their own name or for their own account, broker the company’s transactions for others, participate in another company as a shareholder with unlimited liability, or serve on bodies of another company with similar business activities.
No such statutory prohibition applies to a shareholder. In principle, a shareholder may participate in a competitor’s business, hold a stake in another company in the same sector or operate independently in the company’s field. Participation in an s.r.o. is primarily an investment interest and does not include the same statutory loyalty duties imposed on directors.
Can the memorandum impose stricter rules?
The law expressly permits the company to go further. Under Section 136(3), the memorandum or articles may specify the extent to which the non-compete duty also applies to shareholders. A company wishing to prevent shareholders diverting business elsewhere must put this in its founding documents. Otherwise, shareholders remain outside the prohibition. Define the restricted activities, territory and duration clearly to make the restriction enforceable.
What to consider
The two regimes overlap where a shareholder is also a managing director. As director, they are bound by law; as shareholder, only to the extent provided in the founding documents. We reflect suitable restrictions in the memorandum or articles and, where appropriate, the director’s service agreement. If a breach has occurred, we help through shareholder dispute resolution.
This answer provides general information on the law as at 17 August 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
