Company A was established in 2003, mainly engaged in the sales of data tapes, tape drives, and barcodes, tape testing, and tape destruction and demagnetization. As a manager, Mr. Wang is responsible for the communication with major foreign customers, domestic tape sales, and testing business. Company B was established in 2013, with Wang and his wife as shareholders and Wang's mother as the legal representative. After the establishment of Company B, Mr. Wang took advantage of his position as manager of Company A to transfer part of Company A's business to Company B through various means such as sending company business change instructions to customers in his charge through his email address, publicly notifying customers in his charge of transferring part of Company A's business to Company B. Company A filed a lawsuit to the court, and the court ruled that Mr. Wang would return the income and interest obtained from seeking business opportunities for Company A to Company A.

Lawyer Analysis

Article 148 of the Company Law stipulates that directors and senior management personnel shall not, without the consent of the shareholders' meeting or the shareholders' general meeting, take advantage of their positions to seek business opportunities belonging to the company for themselves or others, or engage in businesses similar to those of the company they serve for themselves or others; The income derived from violation of the preceding paragraph shall belong to the company. The above content is the provisions of the Company Law of China on the duty of loyalty and the duty of non competition of directors and senior managers. From this provision, it can be seen that the main actors of the non competition obligation are directors and senior management personnel, and the period during which they undertake the non competition obligation should start from the time of taking office and end at the time of leaving the company; The behavior is manifested by taking advantage of position convenience and usurping business opportunities that should belong to the company; The consequence of the act is to return the income obtained from violating the non competition obligation to the company. The aforementioned cases are typical cases of senior managers violating their non competition obligations.

In addition to the provision that senior managers should bear the obligation of "not taking advantage of their position to seek business opportunities belonging to the company for themselves or others, or to operate businesses similar to those of the company they serve for themselves or others" under the prohibition of competition, the Company Law does not provide other prohibitive provisions for competitors of companies held by senior managers. Therefore, according to the principle of "acting without prohibition by law", senior managers can hold shares in the company's competitors.

However, senior management personnel have extremely convenient opportunities to utilize the company's customer information, price information, technical secrets, operating conditions, and other business secrets, and have a clearer understanding of the market conditions of the company's similar businesses and other information and intelligence that are extremely important to the company and its competitors. They have the conditions and possibilities to utilize their positions conveniently; Competitors of companies held by senior managers, especially when their shareholding ratio is high or they are absolutely controlled, are bound to have the suspicion of "using their positions to seek business opportunities belonging to the company for themselves or others, and operating businesses similar to those of the company they work for themselves or others.". In practice, the "who claims, who provides evidence" principle is applicable to the "liability for damage to the interests of the company" lawsuit filed by companies in accordance with the provisions of the prohibition of business competition. Companies must bear a heavier burden of proof, providing evidence on whether they belong to "similar businesses", whether there are "taking advantage of their position to facilitate" and "seeking business opportunities belonging to the company". There are also many cases where companies are unable to provide evidence, resulting in rights protection failures. Therefore, from the perspective of corporate governance and safeguarding the interests of the company, the company should make certain restrictions on the shareholding of senior managers in competitors, clarify the connotation and extension of "similar businesses", "utilizing position convenience", and "seeking business opportunities belonging to the company", and make provisions in the company's articles of association; At the same time, it can also be stipulated in the company's rules and regulations, labor contracts, confidentiality agreements, and non competition agreements in accordance with the provisions of the Labor Contract Law on confidentiality and non competition.

(This article is translated by software translator for reference only.)