Introduction
A non disclosure agreement Malaysia (NDA) is important to protect valuable business information and other confidential information. This article explains the purpose, types, and main terms to be included.
Purpose of NDAs
Non-disclosure agreements (NDAs) are important for the following reasons:
Maintain competitive advantage
To ensure that recipients of those information do not share valuable business information with outsiders. In Malaysia, businesses use these confidentiality agreements to protect their trade secrets and other confidential business information.
Trust and confidentiality
Establishing trust is essential in any business relationship. NDAs help build and establish trust by ensuring confidential relationships and privileged information and term secrecy are protected.
Deterrent Against Unauthorized Disclosure
NDAs prevent any unauthorised disclosure. By stating penalties for breaches, these agreements discourage individuals from misusing proprietary information. A proper NDA specifies the consequences of disclosure of sensitive information, and this gives protection to the parties.
Types of NDAs in Malaysia
Non-disclosure agreements in Malaysia are of restrictive NDAs, that prevent disclosure of confidential information. Generally, they are divided into 2 types:
Unilateral: This means that only one party must keep the information confidential. This often happens in employer-employee relationships where the employee is obliged to keep the data and information received during the employment secure.
Usually, these clauses are found in employment contracts in Malaysia, although there are instances where there is a separate non-disclosure agreement for employees. The terms must comply with the employment law, which is the Employment Act 1955.
Mutual NDAs: This is when all the parties in the NDAs are obliged to keep that information confidential. This often happens before various business transactions or collaborations where those information can only be used for that specific business purpose.
Contract for service in Malaysia, sometimes known as service agreements, sometimes contain these clauses too.
Key Terms and Obligations
Any contracts in Malaysia including a non-disclosure agreement Malaysia must comply with the law, with the main ones being Contracts Act 1950. A proper NDA usually contains the following terms:
Definitions of confidential information
This section clarifies what data is considered confidential information. It can involve trade secrets, business plans, proprietary data, financial data, client lists, or any sensitive information shared between parties during various business relationships.
Obligations of Parties
The NDA states the confidentiality duties of the parties, including the recipient, to keep those confidential data secure. Furthermore, it can also state the other scope of work they have to do, such as taking reasonable measures to protect it such using secure storage and limiting access.
Duration of Confidentiality Obligations
This states the duration for which the parties have to keep those confidential materials from authorised disclosure. This period can range from a few years to indefinitely, depending on the nature of the information. For instance, sensitive information may require longer protection.
Exclusions from Confidentiality
There are times when that confidential or business information can be disclosed. These disclosures usually include public disclosures (that information has been publicly available beforehand) and confidential exchanges (disclosures to persons that require this information for that transaction)
Consequences for Breaches
A comprehensive NDA will state the clear consequences of any breach. These consequences ensure accountability for all parties involved.
If there is any breach, the innocent party can seek legal rights by initiating action in courts such as High Court of Malaya. If you are looking to have an effective NDA, a non-disclosure agreement template may not be suitable as each situation is different.
Conclusion
Non-Disclosure Agreements (NDAs) in Malaysia are important to protect your confidential information in Malaysia. If you are looking for a legal firm in Kuala Lumpur for assistance or have any questions, do contact us. We will assist you.
Frequently Asked Questions
1. What is a Non-Disclosure Agreement in Malaysia?
A Non-Disclosure Agreement (NDA) in Malaysia is a contract that protects confidential information shared between parties. It ensures that sensitive data remains private and cannot be disclosed without consent.
2. What does a non-disclosure agreement do?
A basic NDA ensures the parties do not disclose information shared between them except for authorized disclosures. This prevents unauthorized disclosure and maintains a business competitive advantage
