There is a trend of people demanding the signing of confidentiality or non-disclosure agreements (NDAs). An NDA makes sense: South Africa does not currently have a general data protection law and therefore information disclosed confidentially is not necessarily protected by law. The Personal Data Protection Act (POPI), currently drafted by the South African Law Commission, is one such general law, but it is not yet in force. See our article “Privacy: Will the wait be over soon?”. However, some laws (for example, the National Credit Act) protect “confidential information”. In addition, confidentiality clauses in non-disclosure agreements are the only way to protect confidential business information. Once the POPI becomes law, confidential information will become part of the definition of “personal information” protected by law. As part of this process, it is very important to correctly identify the information to be protected and to plan for disclosure. At a high level, you need to decide if you want to: A buyer may want to impose privacy terms on suppliers to cover their own proprietary information when potential suppliers review existing processes and procedures to determine how their products and services meet buyers` requirements. When businesses are acquired and sold, the review and valuation of intellectual property assets has become a key task in the context of “due diligence,” a thorough investigation conducted by the company`s buyer to identify, test, and quantify that part of the purchase against the price.

When I choose to follow the path of an NDA, I invariably find that the level of care that companies take when implementing an NDA before engaging in discussions with a potential business partner is inversely proportional to the amount of thought and effort invested in developing what should be included in the NDA. effectively protect confidential information and minimise the risk of secrecy – which mainly concerns the whole exercise (the essential purpose of a confidentiality agreement is to ensure that confidential information remains confidential and is not sent to competitors, shared with the general public or exploited in competition with the owner). In all these circumstances, the use of non-disclosure agreements is intended to attempt to provide some protection and to show that no general disclosure is provided. There are two questions I`d like to address in this article: When it comes to planning disclosure, consider the following: In my experience, companies simply pull out this standard template and review the requests to be completed without carefully considering the practical implications of the NDA: How can confidential information to be disclosed be protected? Business people must pay due attention to monitoring the use of confidential information and its safe custody. This principle applies not only to paper documents, but also to material provided electronically, on the screen, by e-mail or via a USB stick, CD or DVD. The somewhat frivolous treatment of the control and performance of obligations must stop! A good example of power (imbalance) is that of venture capitalists (VCs) who are notorious (at least in the US) for not being willing to sign an NDA. The reason? At any given time, they look at three or four similar deals and aren`t ready to create legal problems because they sign an NDA and then find another similar company – which makes the paranoid entrepreneur believe that the venture capitalist stole his idea (see Guy Kawasaki`s post “The Venture Capitalist Wishlist”, in which he also points out, that “if you asked them to sign one, you might as well tattoo yourself `I`m distraught` on your forehead!”). Many business people I know are simply not willing to go through the process of reading the NDA and decide if they have trouble dealing with their lawyer to change them, and then getting you to deal with your lawyer to accept or decline their requests. If you decide to follow the path of an NDA, then probably the most important question for me is how to approach it in a practical way.

It has everything to do with how it is done and not with what is done. By this I mean particular attention to the fact that the somewhat careless treatment of the control and performance of obligations must come to an end! NDAs are often not worth the paper they`re written on for three reasons: Although you feel like you`re caught between “a rock and a difficult place,” it`s best to have an NDA, provided you`ve carefully thought about how you want to protect your confidential information in practice. .