Skip to main content

Can multiple parties sign a single NDA with another party, or do we need several NDAs?

Carlsbad, CA |

I'm part of a group of 8 people who are about to form a company. We have a meeting set up to talk with a potential investor, and we may be disclosing sensitive information to the investor. I figure, then, that we need an NDA before discussions start.

My question: do each of the 8 of us need to sign a separate NDA with this investor? Or can we just have one NDA that covers all 8 people in the group and the information they'd disclose?

Attorney Answers 4

Posted

Yes, you only need one Non-Disclosure Agreement signed by all 9 of you. My biggest concern, though, is whether or not the NDA is adequate to protect the sensitive information.

Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This Avvo.com posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.

Mark as helpful

1 found this helpful

8 lawyers agree

Posted

The investor is the important party who executes the NDA. An authorized representative of the company can execute the document, acknowledging its receipt, and the company's reliance upon the NDA. Most NDAs are poorly drafted. Be careful.

Each of the eight of you should also be executing a PIIA (proprietary inventions and information agreement) with the company. Your failure to take this important step toward prudent management of the company's intellectual property could have dire consequences.

Hire legal counsel immediately. You can pay a relatively small amount now, and avoid paying a huge amount later.

When I respond to a question posted on Avvo, I provide information for a general purpose. In reviewing my answer, you are specifically warned that your use of, or reliance upon any response that I provide would be a bad idea. I do not have all relevant background or facts related to your matter, and am not in a position to give you legal advice. Further, your review, use of, or reliance upon any response by me does not establish an attorney-client relationship between us and does not qualify as a legal consultation for any purpose.

Mark as helpful

1 found this helpful

9 lawyers agree

1 comment

Edward Zaryl Kotkin

Edward Zaryl Kotkin

Posted

Since I now see that you are pre-formation and based upon Ms. Ginossi's correct comment, here's an additional thought. If only one (1) of your octet signs the NDA with the investor . . . (A) the NDA should provide notice to the investor that the company isn't yet formed, but that this NDA will be for the company's benefit (and perhaps the benefit of each of its shareholders) - in effect, your NDA will have third party beneficiaries (be as specific as practically possible), and (B) the company (after its formation) can ratify the NDA by written consent, acknowledging the NDA as an action appropriately taken by individual X on the company's behalf. At that point, provided that your NDA gave the investor full and proper notice of the company purpose, your NDA will inure to the benefit of whoever you like.

Posted

I agree with my colleagues. You only need one, but a good one. Boilerplate NDAs are particularly horrible in terms of "off the shelf" documentation because they just cannot predict the consequences of facts that an interview with an attorney would uncover, and thus deal with. The legal versus the psychological benefits are a different issue.

The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.

Mark as helpful

1 found this helpful

7 lawyers agree

Posted

If you haven't yet formed a company and issued membership interests to each of the 8 people, then yes, all 8 people can sign the same document as the disclosing party. However, note that many potential investors will push back or negotiate the NDA, as the document may make it difficult to seek out investment opportunities in the future, particularly if the subject opportunity is defined in very broad terms.

With the above in mind, wise to coordinate with an attorney on drafting and signing an NDA so that you don't make a costly misstep.

Mark as helpful

1 found this helpful

4 lawyers agree

Employment topics

Top tips from attorneys

What others are asking

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer

Browse all legal topics