Non-disclosure agreement (NDA)

A non-disclosure agreement (NDA) in business and finance is a legally binding contract used to protect sensitive information shared between parties involved in commercial transactions, negotiations, or partnerships. It is a crucial tool for safeguarding knowledge, trade secrets, financial data, and other confidential information.

The primary purpose of an NDA in business and finance is to establish a framework for maintaining confidentiality. This is particularly critical when sharing information that could have a significant impact on the parties involved, such as business strategies, financial projections, proprietary technology, or merger and acquisition discussions.

When startups or established companies seek investments, NDAs can be used to protect business plans, financial forecasts, and other proprietary information shared with potential investors or venture capitalists.

In the employment context, NDAs are often used to ensure that employees or contractors do not disclose sensitive information about the company, its clients, or its operations, even after their employment or contract ends.

The agreement sets a specific time frame during which the receiving party is obligated to keep the information confidential. This period is determined by mutual agreement and can vary depending on the nature of the information.

In international business and finance, NDAs may need to address cross-border issues, such as differing legal systems, languages, and regulations.