South DakotaBusiness owners may agree to limit competing work after ownership transfers
Business-entity parties may include an agreement that limits a transferring owner's direct or indirect competition for up to three years.
What it does
Business-entity parties may agree that an owner who transfers an interest cannot directly or indirectly compete in the same or a similar business for up to three years. The agreement must cover the entity's business area.
Argument forA restriction tied to an ownership transfer could help the remaining owners protect the business from direct competition in its service area.
Argument againstA transferring owner could face limits on working in the same or a similar business for up to three years after leaving.
More detail
Parties may agree to stop a transferring owner from directly or indirectly competing with the business. The rule applies to an owner transferring an ownership interest in a business entity and to the same or a similar type of business operated by that entity. The agreement must appear in the entity's governing document or in a contract to buy, sell, or transfer an ownership interest. The restriction must name a geographic area where the entity does business. The restriction may last no longer than three years from the transfer date. The restriction applies after the owner transfers the ownership interest and may run for up to three years from that transfer.
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Where it stands
- Introduced
- Passed House
- Passed Senate
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Mar 12Signed by the Governor Larry Rhoden on 2026-03-12 H.J. 571Became Law
- Mar 10Delivered to the Governor on 2026-03-10 H.J. 546To Governor
- Mar 9Signed by the President S.J. 506Major
- Mar 5Signed by the Speaker H.J. 529Major
- Mar 4Senate Do Pass , Passed, YEAS 34, NAYS 0 S.J. 461Passed Senate
- Vote recorded Do Pass. Result: pass.Upper
- Mar 3Certified uncontested, placed on consent , Passed,
- Vote recorded Do Pass. Result: pass.Upper
- Mar 3Commerce and Energy Do Pass , Passed, YEAS 7, NAYS 0Minor
- Mar 3Scheduled for hearing
- Feb 10First read in Senate and referred to Senate Commerce and Energy S.J. 232Minor
- Feb 9House of Representatives Do Pass , Passed, YEAS 63, NAYS 2 H.J. 266Passed House
- Vote recorded Do Pass. Result: pass.Lower
- Feb 6Judiciary Do Pass , Passed, YEAS 10, NAYS 1 H.J. 14Minor
- Vote recorded Do Pass. Result: pass.Lower
- Feb 6Scheduled for hearing
- Jan 28First read in House and referred to House Judiciary H.J. 164Introduced
Economy & Jobs