This article is for Irish startup founders and business owners dealing with a co-founder who has left to start a competing business.
If you're facing a situation where your former co-founder is using company knowledge, clients, or relationships to compete against you, this guide covers your legal options under Irish law, how to stop the competing activity through emergency injunctions, and how to claim damages for breach of fiduciary duty.
Key Takeaways
Directors owe statutory duties of loyalty under Section 228 of the Companies Act 2014, even without written non-compete clauses.
Apply for an emergency injunction immediately if competing activity is ongoing to stop it while the dispute resolves.
Non-compete clauses must be reasonable in duration, geography, and scope or courts will strike them down entirely.
You can claim account of profits to recover money your co-founder made, even without direct company losses.
Remove the competing co-founder as director through board resolution and gather evidence of diverted clients or staff immediately.
Laura Ryan is a practising Barrister at the Bar of Ireland. She graduated from the Honourable Society of King’s Inns in 2024, having previously qualified and practised as a Chartered Accountant in a big four accounting firm.
Does my co-founder owe any legal duties to the company even without a written contract?
Yes, every director in Ireland owes fiduciary duties to the company under Section 228 of the Companies Act 2014, regardless of whether there's a written agreement. These duties include acting in good faith in the company's interests, avoiding conflicts of interest, and not using company information or opportunities for personal benefit—and they apply for as long as the person holds office as a director.
Can I stop my co-founder from competing against our company right now?
Yes, you can apply for an emergency interlocutory injunction to immediately stop the competing activity while the full dispute is resolved. You'll need to show there's a serious question to be tried, that you'd suffer damage that money can't adequately compensate, and that the balance of convenience favours granting the order. Courts in Ireland take director disloyalty seriously and often grant interim relief quickly when the evidence is clear.
Is the non-compete clause in our shareholders' agreement actually enforceable?
Non-compete clauses are enforceable in Ireland, but only if they're reasonable. The clause must protect a legitimate business interest, be limited to one to two years after departure, cover only geographic markets where you actually operate, and not go further than necessary. If your clause is too broad—like covering entire industries for five years globally—courts will strike it down entirely, leaving you with nothing.
Can I claim damages for business my co-founder has already diverted away?
Yes, you can bring a claim for breach of fiduciary duty to recover losses. Available remedies include compensation for direct losses the company suffered, an account of profits requiring the co-founder to hand over any profits they made from diverted opportunities (even if you didn't suffer direct financial loss), and equitable compensation for broader harm. If a non-compete clause was breached, you can also bring a separate breach of contract claim.
What should I do if my co-founder is recruiting our staff or contacting our clients?
Document every instance of contact you become aware of, speak directly to affected employees or clients and record what they tell you, and consider writing formally to the co-founder putting them on notice that the activity must stop. Even without a written non-solicitation clause, a director who actively recruits company staff or contacts clients on behalf of a competitor while still in office may be breaching their duty of loyalty under Section 228.
What evidence do I need to gather before taking legal action?
You should collect company registration records showing the new competing entity, any communications where the co-founder discussed or referenced the competing business, evidence of clients, staff, or contracts that have been approached or diverted, and relevant provisions from your shareholders' agreement or company constitution. The stronger your evidence at the early stage, the more likely the court is to grant interim relief.
Should I remove my co-founder as a director immediately?
Consider passing a formal board resolution recording the conflict and, if appropriate, removing the co-founder as a director—but first review your company constitution for relevant provisions around director conflicts and removal. This should be part of a broader strategy that includes gathering evidence, reviewing your shareholders' agreement, and moving quickly on injunctive relief if the competing activity is causing active harm.
What's the first thing I should do if I discover my co-founder is competing?
Gather evidence as soon as possible, ensuring all steps are taken lawfully and in compliance with data protection and employment law obligations. Then review your shareholders' agreement to understand what non-compete, non-solicitation, and confidentiality obligations apply, and check your company constitution for provisions around director conflicts and removal before taking further action.
