The Restrictive Trade Practices (Services) (Amendment) Order 1989

Article 2

SCHEDULE

articles added to restrictive trade practices (services) order 1976

5.—(1) This article applies to an agreement made on or after the date on which the Restrictive Trade Practices (Services) (Amendment) Order 1989 came into force(1)–

(a) the parties to which include a person (the “vendor”) who agrees to transfer shares in a company or the whole of his interest in a business to a purchaser;

(b) under which, in the case of an agreement for the transfer of shares in a company, more than 50 per cent in nominal value of the issued share capital of that company is transferred or agreed to be transferred to one purchaser or to more than one purchaser each of which is a member of the same group;

(c) under which no relevant restriction in respect of any of the matters specified in article 3(2)(a) of this Order is accepted by a person; and

(d) under which no relevant restriction in respect of any of the matters specified in article 3(2)(b) to (e) of this Order is accepted by a person other than such a person as is described in paragraph (2) below.

(2) Persons by whom a relevant restriction may be accepted for the purpose of paragraph (1)(d) above are–

(a) any vendor;

(b) any member of the same group as any vendor; and

(c) any individual;

other than a body corporate or unincorporate which is also a purchaser under the agreement in question, or a member of the same group as such a body.

6.—(1) In determining whether an agreement to which article 5 applies is an agreement to which the Act of 1976 applies by virtue of this Order, no account shall be taken of any relevant restriction–

(a) which is accepted for a period not exceeding that permitted under paragraph (2) below; and

(b) which limits the extent to which the person accepting the restriction may compete with the acquired enterprise, or may be engaged or interested in, disclose information to, or otherwise assist any business which so competes.

(2) For the purpose of paragraph (1)(a) above, a permitted period is:–

(a) a period of 5 years beginning with the date of the agreement; or

(b) in the case of restrictions accepted by an individual who is to have a contract of employment with or a contract for the supply of services to the acquired enterprise, the purchaser, or a member of the same group as the purchaser, a period beginning with the date of the agreement and ending 2 years after the date of expiry or termination of the contract,

whichever ends the later.

7.  This article applies to an agreement made on or after the date on which the Restrictive Trade Practices (Services) (Amendment) Order 1989 came into force(1)–

(a) which provides for a person (the “subscriber”) to subscribe (whether or not in cash) for shares in a company (the “issuing company”);

(b) under which no relevant restriction in respect of any of the matters specified in article 3(2)(a) of this Order is accepted by a person; and

(c) under which no relevant restriction in respect of any of the matters specified in article 3(2)(b) to (e) of this Order is accepted by a body corporate or unincorporate.

8.—(1) In determining whether an agreement to which article 7 applies is an agreement to which the Act of 1976 applies by virtue of this Order, no account shall be taken of any relevant restriction–

(a) which is accepted for a period not exceeding that permitted under paragraph (2) below; and

(b) which limits the extent to which the person accepting the restriction may compete with the issuing company, or may be engaged or interested in, disclose information to, or otherwise assist any business which so competes.

(2) For the purpose of paragraph (1)(a) above, a permitted period is:–

(a) a period of 5 years beginning with the date of the agreement; or

(b) in the case of restrictions accepted–

(i) by a member of the issuing company, a period beginning with the date of the agreement and ending 2 years after the date on which that person ceases to be a member; or

(ii) by an individual who is to have a contract of employment with or a contract for the supply of services to the issuing company, a period beginning with the date of the agreement and ending 2 years after the expiry or termination of the contract,

whichever ends the later.

9.  In articles 5 to 8 above–

“the Act of 1976” means the Restrictive Trade Practices Act 1976;

“acquired enterprise” means a company in which shares are acquired or a business an interest in which is acquired;

“business” means any undertaking which is, or any part of an undertaking which part is–

(a)

carried on as a going concern for gain or reward; or

(b)

carried on as a going concern in the course of which goods or services are supplied otherwise than free of charge;

“company” means a company as defined in section 735 of the Companies Act 1985(2) and an oversea company as defined in section 744 of that Act;

“contract of employment” means a contract of service whether it is express or implied and (if it is express) whether it is oral or in writing;

“goods” has the same meaning as in section 43(1) of the Act of 1976;

“group” means a group of interconnected bodies corporate within the meaning of section 43(1) of the Act of 1976;

“member of the issuing company” is to be construed in accordance with section 22 of the Companies Act 1985;

“purchaser” means a person acquiring shares in a company, or acquiring an interest in a business, whether for cash or otherwise;

“relevant restriction” means a restriction in respect of the matters specified in article 3(2) of this Order;

“services” has the same meaning as in section 20 of the Act of 1976.

(1)

The Restrictive Trade Practices (Services) (Amendment) Order 1989 came into force on 30th June 1989.

(2)

1985 c. 6.