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Sensitive Data Disclosure: What You Need to Know

As companies navigate the complex process of legal due diligence, one crucial aspect is often overlooked: the disclosure of personal data. In this article, we’ll delve into what you need to look out for when reviewing information and what sensitive data may be at risk.

Triggers for Disclosure

When conducting a thorough review of the target company’s contracts, it’s essential to consider potential triggers that could impact the transaction. These might include:

  • Contractual covenants, such as change of control clauses or limitations on voting rights
  • Antitrust or regulatory issues that require the buyer to dispose of certain assets before completing the acquisition

Corporate Information: A Delicate Balance

When reviewing corporate information, it’s crucial to strike a balance between ensuring transparency and protecting sensitive data. A search of the ACRA BizFile+ platform can provide valuable insights into the target company’s:

  • Financial statements
  • Shareholder details
  • Organizational documents

However, this information may not always be up-to-date or accurate. To mitigate this risk, buyers should:

  • Request warranties from sellers that all required filings have been completed accurately and on a timely basis
  • Conduct searches against relevant target group companies at the outset of due diligence and refresh these searches closer to signing and completion

Sensitive Data Disclosure: What’s at Risk

When requesting corporate information, buyers may inadvertently disclose sensitive data. This could include:

  • Financial statements that contain personal data
  • Shareholder details that reveal individual identities
  • Organizational documents that contain restrictions on personal data

To minimize the risk of sensitive data disclosure, it’s essential to carefully review due diligence requests and ensure that all requested information is necessary for the transaction.

Conclusion

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In conclusion, when conducting legal due diligence, it’s crucial to be mindful of the potential risks associated with sensitive data disclosure. By taking a proactive approach to reviewing corporate information and requesting necessary warranties, buyers can minimize the risk of inadvertently disclosing personal data. Remember: transparency is key in any transaction, but so is protecting sensitive data.