Authorized disclosure: Overview, definition, and example
What is authorized disclosure?
Authorized disclosure refers to the permitted release or sharing of confidential, proprietary, or sensitive information under specific conditions outlined in a contract, agreement, or legal framework. This means that a party may disclose certain information to designated individuals or entities without breaching confidentiality obligations. Authorized disclosures are typically allowed when required by law, regulatory authorities, or with the consent of the disclosing party.
For example, a company may authorize its employees to disclose financial information to auditors or government agencies as part of a regulatory compliance process.
Why is authorized disclosure important?
Authorized disclosure is important because it defines when and how confidential information can be legally shared, ensuring compliance with privacy laws, regulatory requirements, and contractual agreements. Without clear authorization, unauthorized disclosures could lead to legal disputes, financial penalties, or reputational damage. Properly defining authorized disclosure helps businesses maintain control over sensitive information while ensuring that necessary disclosures can be made without violating confidentiality agreements.
For businesses, authorized disclosure provisions help balance transparency and confidentiality, ensuring that disclosures are made responsibly while protecting trade secrets, customer data, or proprietary information.
Understanding authorized disclosure through an example
Imagine a technology company enters into a non-disclosure agreement (NDA) with a business partner to protect proprietary software information. The NDA includes an authorized disclosure clause that permits sharing the software details with regulatory authorities if required by law. If the government requests access for compliance verification, the company can disclose the necessary information without breaching the NDA.
In another example, a financial institution handling client transactions may have an authorized disclosure policy allowing it to share client financial records with tax authorities or law enforcement agencies when required under anti-money laundering (AML) regulations.
An example of an authorized disclosure clause
Here’s how an authorized disclosure clause might look in a contract:
“The Receiving Party shall not disclose Confidential Information except as authorized under this Agreement. Authorized disclosure includes: (i) disclosure required by law, regulation, or court order, provided that the Receiving Party notifies the Disclosing Party prior to disclosure, where legally permitted; (ii) disclosure to employees, agents, or advisors who have a need to know such information and are bound by confidentiality obligations; and (iii) disclosure with the prior written consent of the Disclosing Party.”
Conclusion
Authorized disclosure is a critical contractual provision that allows parties to share sensitive information under specific, legally defined conditions while maintaining confidentiality. Clearly outlining the scope of authorized disclosures in contracts helps businesses comply with legal and regulatory requirements while protecting confidential data from unauthorized access. When drafting agreements, specifying when and how disclosures may be made ensures transparency, legal compliance, and protection of business interests.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.