When presented with an agreement for the sale of the shares of a private company under which various shareholders were required to agree to a non-competition covenant (“NCC”) and a non-solicitation covenant (“NSC”), the Directorate found that “essentially, the terms of the NCC and NSC … reflect the conditions that one might normally expect to see in a typical non-competition agreement,” so that they “could be treated as a single RC [restrictive covenant] that is in respect of a non-compete covenant.” As the other conditions of s. 56.4(7) also were met, s. 68 did not apply.
Before so concluding, the Directorate noted that, in dealing with the similar language in s. 56.4(3)(c)(ii), it had considered that
s. 56.4(3)(c)(ii) … would allow an election with respect to the undertaking not to solicit the clients of the corporation that is sold, but it would not allow such an election with respect to the value of an undertaking not to solicit the employees to change employment ...
and that
the fact that a non-competition agreement may include both a non-competition and a confidentiality clause would not in and of itself disqualify the entire non-competition agreement for the purposes of the exceptions in subsection 56.4(3) or 56.4(7).