Are Your Startup's Secrets Secure? Preparing for Imminent NDA Law Changes
For any innovative startup, protecting intellectual property is paramount.
Non-Disclosure Agreements (NDAs) are a cornerstone of this protection, especially when dealing with patented technology or trademarked assets.
However, a significant change to the law is just a week away, and you need to be ready.
From 1st October, new legislation will come into effect that alters the power of NDAs.
Here at Zyla Accountants, we help startups navigate the complexities of the business world, and this is a development you cannot afford to ignore.
What is changing?
The new rules are an update to the Victims and Prisoners Act 2024. Their primary focus is to make it explicit that an NDA cannot be used to prevent someone from reporting a crime.
The law now clarifies a list of "permitted disclosures". This means that an individual who has "...suffered harm as a direct result of being subjected to conduct which constitutes a criminal offence" (or reasonably believes they have) can report it to a specific list of people without being in breach of their NDA. Crucially, the Ministry of Justice has stated that a formal investigation or conviction is not required for someone to hold this belief.
How does this impact your startup?
While the changes are centred on criminal conduct, they have direct ramifications for how startups use NDAs to protect their IP.
If an employee, contractor, or collaborating partner believes they have been the victim of a crime within the context of your business, they are now legally protected when reporting it.
The list of people and organisations they can disclose information to includes:
The Police and other crime prosecution bodies
Qualified and regulated lawyers
A victim’s close family or support persons
Key professional regulators such as the Financial Conduct Authority (FCA), the Information Commissioner’s Office (ICO), the Health and Safety Executive (HSE), and the Serious Fraud Office (SFO).
NDAs remain a vital tool for protecting your innovations, but you must be aware that their protective power now has clear legal limits.
How can you prepare for the changes?
Proactive steps taken now will ensure your startup remains protected and compliant.
Review Your Current NDAs: The most urgent task is to review and update your NDA templates. The law does not ban NDAs, but your agreements must reflect these new rules. Accurate wording is essential to ensure that all parties clearly understand their rights and your IP remains as secure as possible. You can find government resources via your Companies House WebFiling account to help guide this review.
Conduct an IP Health Check: Use this as an opportunity to ensure your core IP is robust. Are your trademarks and patents fully registered and up to date? Strong, legally registered IP is your best line of defence, complementing your NDAs.
Note Other Digital Changes: On a related administrative note, be aware that the Companies House WebFiling platform will be replaced by the GOV.UK One Login system on 13th October. Ensure all your company information is ready for this transition.
These changes require careful attention from founders. By understanding the new landscape and updating your legal documents, you can ensure your startup’s valuable ideas remain protected while operating in full compliance with UK law.