When can a former director take a business idea with them? 

If a director or co-founder leaves your business and goes on to build something similar elsewhere, can you stop them, or claim a share of what they build? It is a question that comes up whenever a departure turns sour, usually once the relationship has already broken down and the former director’s new venture is starting to look uncomfortably familiar. A recent High Court decision shows where the legal line is drawn, and the answer may surprise many business owners. 

In Hipgnosis Music Limited v Merck Mercuriadis and others [2026] EWHC 1500 (Ch), the High Court considered whether a former director had taken a valuable business opportunity from a company he once ran and used it to build a successful new venture. The claimant company sought an account of profits worth hundreds of millions of dollars. Its claim failed, offering important lessons for businesses working with co-founders, directors and senior executives. 

What happened 

Between 2015 and 2018, music manager Merck Mercuriadis, a well-established figure in artist management whose career included working with Sir Elton John and Beyoncé, was a director of two connected companies formed to buy music publishing catalogues, which he believed streaming would make more valuable. The venture collapsed after it emerged that two Swedish co-investors had funded it through fraud. One company was wound up and the other dissolved. 

Mr Mercuriadis later pursued the same opportunity through new companies. One raised more than £200 million on flotation and acquired a large portfolio of song catalogues. 

Years later, the original company was restored to pursue a claim against him. It alleged that Mr Mercuriadis had taken its business idea, contacts and arrangements and used them to make substantial profits elsewhere. It sought an account of those profits. 

Why the claim failed 

These cases turn heavily on the evidence. The court examined emails, prospectuses, board minutes and witness testimony to determine who developed the idea, what each party knew and when, and whether Mr Mercuriadis’s account was credible. 

The court confirmed that resignation does not allow a director to exploit an opportunity learned of through their role. A director’s duties may continue to protect an opportunity that genuinely belonged to the company. 

However, the evidence showed that Mr Mercuriadis had already formed the view that music catalogues were undervalued before the companies were established. They were created to pursue his existing idea, rather than an opportunity he discovered as a director. 

The company argued that the idea became its property once it was developed through industry contacts, specialist advisers and commercial arrangements. The court disagreed. Developing a pre-existing idea into a detailed proposal did not make it company property. A director can generally leave with their own experience, insight and know-how, although not with a business opportunity belonging to the company. 

A dissolved company does not change the answer 

One of the two original companies had not simply been wound up. It had been struck off the register and dissolved, then formally restored to the register years later specifically to bring this claim. The company argued that being restored meant its former director should be treated as though he had remained bound by his usual duties throughout the years the company did not legally exist. 

The court rejected that too, in line with the Supreme Court’s recent decision in Bilta UK Ltd v Tradition Financial Services Ltd [2025] UKSC 18, which addressed the same point in a different context. Restoring a dissolved company does not automatically mean the law assumes anyone was still acting as its director while it was off the register. If that period matters to a claim, it needs to be proved as a fact, with evidence, rather than assumed. 

What this means for your business 

The clearest lesson is that timing and ownership matter. The law may protect a valuable opportunity, contact or information obtained by a director or senior executive through their role, even after they leave. Resignation does not end that duty. However, an idea, industry insight or expertise they brought into the business will generally remain theirs. Building a venture around that knowledge does not automatically give the company ownership of it. 

This is particularly relevant where founders bring an existing business concept, contacts or specialist expertise into a new venture. If ownership is simply assumed rather than documented, disputes may arise years later when the relationship breaks down and the venture has become valuable. 

Businesses should therefore clearly record who owns intellectual property developed during the relationship, what is confidential, and how opportunities identified for the company must be handled. Reasonable and enforceable post-termination restrictions may also be appropriate. These issues should be addressed at the outset and revisited when someone leaves, when the parties can clarify what is and is not company property. 

If a company has been dissolved and later restored, do not assume the intervening period is treated as though nothing changed. Any continuing duties or obligations must be established by evidence. 

If a dispute arises, act early. Preserve relevant emails, board minutes, prospectuses and correspondence, and seek advice before positions harden. As this case shows, the outcome is likely to depend on the documentary record rather than a general view of what was fair. 

About the Author: Fleur Uren is a Solicitor in the Commercial Dispute Resolution team at Coodes Solicitors, one of the largest commercial litigation teams in Cornwall. She advises businesses across the county and beyond on a wide range of disputes, including commercial property, contract and construction matters, insolvency litigation, and shareholder, director and partnership disputes and intellectual property disputes 

Get in touch: fleur.uren@coodes.co.uk   01872 246238