Permitted Disclosures Under an NDA: When You Can Legally Share
What This Clause Does
Even under a strict NDA, there are situations where you need to share information with others, like your lawyer, accountant, or employees who need to know. The permitted disclosures clause defines exactly when this is allowed and under what conditions.
You should also have an exception allowing you to disclose information if legally compelled to do so (by a court order or government investigation). Without this exception, the NDA could put you in the impossible position of violating either the NDA or the law.
Example Clause Pattern
"Receiving Party may disclose Confidential Information to its employees and contractors who (i) have a need to know such information, and (ii) are bound by confidentiality obligations no less restrictive than those in this Agreement. Receiving Party may also disclose as required by law, provided it gives Disclosing Party prompt notice and cooperates with any protective order request."
What to Watch
- No exception for legally compelled disclosures
- Employees and contractors who receive information are not required to be bound by confidentiality
- No provision for giving notice before a legally required disclosure
- Exception for legal advisors requires prior written approval from the disclosing party
What to Negotiate
- Ensure the list of permitted recipients covers your likely scenarios: employees, contractors, legal advisors, accountants, and potential acquirers during due diligence
- Require only that permitted recipients be subject to 'equivalent' confidentiality obligations — not a separate written agreement that the disclosing party controls or must approve
- Add a notice provision for legally compelled disclosures giving you reasonable time to notify before disclosing, rather than requiring you to seek advance approval
- Confirm that sharing with professional advisors under attorney-client privilege is explicitly permitted without extra conditions
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Found in These Contracts
This clause commonly appears in the following contract types:
Frequently Argued Questions
Who can I share NDA-protected information with?
Most NDAs permit disclosure to employees and contractors who need the information to perform their work, provided they are bound by confidentiality obligations at least as restrictive as the NDA. Professional advisors — lawyers, accountants, and financial advisors — are typically also permitted, often by explicit carve-out. Anyone else should be approved in advance by the disclosing party. If your agreement does not explicitly cover a category of people you need to share with, negotiate it before signing.
What happens if I am subpoenaed or ordered by a court to disclose NDA information?
A well-drafted NDA includes an exception for legally compelled disclosures. It typically requires you to: (1) give the disclosing party prompt written notice, (2) cooperate with any request to seek a protective order, and (3) disclose only the minimum information required. If your NDA does not have this exception, you could face the impossible choice of complying with a court order or breaching the agreement. Always insist on a legal compulsion carve-out.
Can I share confidential information with potential investors or acquirers?
Not automatically. Standard permitted disclosure provisions cover employees and advisors, not investors or acquirers. If you are going through fundraising or a sale process, you need the NDA to explicitly permit disclosure to investors and potential buyers — typically requiring them to sign their own confidentiality agreement. Negotiate this upfront, or you may need to obtain permission each time from the other party.
Negotiation Strategies
Ensure the legal compulsion exception gives you time to notify the disclosing party
Confirm professional advisors (lawyers, accountants) are explicitly covered
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