A financial non-disclosure agreement (NDA) is really just a standard NDA that allow for the disclosure of confidential financial information, usually in commercial contexts or potential investment or acquisition contexts. Financial non-disclosure agreements (NDA) allow companies and individuals to prevent disclosure of sensitive company or personal financial information in service of a legitimate business purpose. Financial non-disclosure agreements are often used when companies are considering a merger or acquisition, during a real estate transaction, and when working with potential investors.

No matter what kind of NDA you’re considering, it should follow the best practices regarding the drafting and use of NDAs. In employment contexts, there are also state and federal laws to be considered. Read on to learn more about financial NDAs and how to protect your sensitive financial data with SixFifty’s NDA tools.

What is a financial non-disclosure agreement?

General non-disclosure agreements are used to protect confidential information for a legitimate business purpose, with certain limitations. NDAs can be unilateral or mutual: a unilateral NDA allows for only one party to disclose protected confidential information, while a mutual NDA allows for both parties to do so. A multilateral NDA allows for three or more parties to disclose protected confidential information.

Financial non-disclosures are specifically used to protect financial data, whereas other NDAs might be used to protect other confidential information, such as product prototypes, customer and marketing prospect lists, and other business interests. However, information which is already independently known to the parties or publicly available at the time of the agreement cannot be protected under an NDA.

When would you use a financial NDA?

Financial NDAs are used when confidential financial information needs to be disclosed between parties without the need for the confidential disclosure of other types of information.

Financial non-disclosures can also be either unilateral or mutual. Unilateral financial non-disclosure agreements are often used when companies are considering a merger or acquisition, or a potential investment, while mutual financial NDAs might be used in commercial contexts.

Keep in mind that, like general NDAs, financial NDAs should be specifically tailored to a legitimate business purpose, and in employment contexts, many states include restrictions on how long the parties are bound by the agreement.

What should be included?

Generally, your financial non-disclosure agreement should include:

  • Parties to the NDA: Your agreement should specifically note who is bound by the agreement, be it an entire company, certain representatives, individuals, or a team.
  • Definition of confidential information to be protected: You must identify and describe the confidential information that’s protected under the agreement. Never assume that the other party will understand what you mean: be detailed and specific. You should also specify permitted uses of the information, such as financial review before investing in Company X.
  • Exclusions to confidential information: Similarly, note any exceptions to the confidential information, such as information which is public or already disclosed to the other party at the time of the agreement.
  • Defend Trade Secrets Act notice: According to the Defend Trade Secrets Act of 2016, if you do not include notice regarding immunity from liability for limited disclosures of trade secrets, if applicable, then you will be limited on the damages that you can recover in the event of a breach of the NDA.

How to create a financial non-disclosure agreement with SixFifty

Financial NDAs should be individually tailored to protect the interests of your company. Drafting your own financial non-disclosure agreement from scratch can be daunting and time-consuming, but hiring a lawyer to create a financial NDA can be prohibitively expensive. On the other hand, protecting your sensitive financial data is crucial. Without a custom NDA, you could expose your company to significant risk.

SixFifty’s NDA tools are the ideal middle ground: generate a custom NDA with ease. Our software pairs real legal expertise with modern technology to generate high-quality NDAs. Just answer a few questions about your business and download the automatically generated NDA.

Ready to create your own NDA? Schedule a free product demo today!