Protection of confidential information is a critical issue nowadays, and Non-Disclosure Agreements (NDAs) are key in matters related to Brazil, including Corporate Governance, M&A and finance transactions, commercial contracts and labor arrangements.
1. In Corporate Governance: Data and strategic plans are major assets of companies and normally shared with C-suite officers, directors and controlling shareholders. Foreign investors holding equity in Brazilian companies must make sure that such companies have in place NDAs with these persons to regulate the use of such data during and after the relationship is terminated. An example of the need for this caution is described in an article in The Wall Street Journal of last week reporting that a major auto company is suing one of its directors for the allegation that he passed confidential data to a competitor.
2. In M&A: In equity transactions in Brazil, the buyer side must evaluate precisely what is defined as confidential data/documents accessed from the target, limiting its scope, confidentiality period and extent of responsibility. The selling side, which is exposing itself, needs to define the buyer’s obligations for such access and for the longest period of time.
3. In Finance Transactions: Foreign lenders must make sure to include in the transaction documents that the confidential information received from Brazilian borrower or guarantors (such as income tax statement) may be passed on to third parties for risk assessment, in case of credit assignment and contractual default.
4. In Commercial Contracts: In commercial contracts connected to Brazilian business partners that involve, for example, license to use a patent and know-how, the licensor needs to pay attention to precisely describe the licensed technology and its confidential treatment during and after the license expires. The other party, in turn, must seek to limit confidentiality in time and not to be confused with confidential data / technology owned by them, which may generate conflict in the future.
5. In Human Resources Arrangements: In the scope of the relationship between Brazilian companies and employees/contractors, it is essential that companies protect confidential information accessed by such stakeholders, providing, when possible, that, not only those of commercial, financial and operational nature are sensitive, but also that those related to technologies developed internally with the contribution of such individuals, are automatically considered as confidential and exclusively owned by the company.
The above points show that handling confidential information is strategic nowadays and should be considered a “must-have” in any type of business related to Brazil.