This bill introduces a new section to chapter 53-9 of South Dakota law, specifically addressing the validity of non-compete agreements within jointly owned business entities. It allows the parties involved in a business entity to include provisions in their governing documents or contracts that restrict an owner's ability to engage in similar business activities after transferring their ownership interest. The restrictions can last for a maximum of three years and must be limited to the geographic area where the business operates.

The legislation aims to clarify and reinforce the enforceability of non-compete clauses in the context of ownership transfers, thereby providing legal certainty for business owners and protecting the interests of jointly owned entities. This addition to the law is significant as it establishes clear parameters for non-compete agreements, ensuring that they are recognized and upheld in South Dakota.