Preventing departing employees' confidential information leakage, protecting startup growth with specific agreements.

Law firm Veat performed legal advisory services regarding the departure of a co-founder at the request of a game developer (hereinafter referred to as "client").

Law firm Veat prepared and provided a specific confidentiality and non-compete agreement to protect the company’s confidentiality and prevent competition during the departure of one of the co-founders. The co-founder departure agreement included confidentiality obligations and non-compete obligations to protect the client’s confidential information after departure and prevent its leakage to the outside.

In particular, the non-compete clause restricted the departure of the founder from establishing a competing company or accepting employment to ensure that the founder's actions did not harm the client’s interests. In addition, a penalty clause was included to prepare for the possibility of a breach of confidentiality or non-compete obligations, thereby strengthening legal stability.

Law firm Veat also revised the rights and obligations of the departing founder as a company shareholder at the client’s request and prepared a shareholders' agreement reflecting this to prevent potential legal disputes between stakeholders. This ensured that the client’s business secrets, etc., could be safely protected even after the founder’s departure, and documents such as the shareholders' agreement were prepared to prevent potential disputes between the founder and the company.

Legal Checklist You Must Know When a Founder Departs - To Protect Startups

Startups build important technology and business strategies and build competitiveness from an early stage. However, when co-founders or key personnel depart, there is a significant risk that the core information and know-how they possess will leak externally, so legal preparation for such situations is essential.

A departure agreement that strengthens confidentiality and non-compete clauses for departing founders and a shareholders' agreement that defines the rights and obligations of departing founders as shareholders can be important legal safeguards. In particular, the shareholders' agreement clearly defines the rights and obligations between the remaining management and shareholders after the departure of a founder, prevents unnecessary legal disputes, and supports the stable growth of the company.

The departure of a founder can be a situation that greatly affects a startup. Therefore, in such situations where the interests of the shareholders are sensitive, the preparation of contracts to minimize legal risks is very important. The shareholders' agreement is a necessary legal basis for the long-term growth of a company, and in the case of startups, it is important to receive legal advice from a lawyer with experience in shareholders' agreements.

Law firm Veat has extensive legal advisory experience for a wide range of companies, from early-stage startups to various growth stages. In particular, it deals with sensitive issues such as the departure of key executives, shareholder agreements, and similar issues faced by companies in the IT/startup sector where technology and business intersect, and provides rapid and professional legal advice like an in-house counsel.

Law firm Veat comprehensively reviews legal issues that can arise in actual business environments and provides legal advice optimized for clients, so if you need regular corporate legal advice, please contact Law firm Veat.

Thank you.
Law firm Veat