8 ms·

An NDA seems reasonable in this case. The article did state that Biederman objected to some of the stipulations which asked him to give up some of his sharehold

An NDA seems reasonable in this case. The article did state that Biederman objected to some of the stipulations which asked him to give up some of his shareholder rights. I suspect the lawyers will make some more money off this and then a more reasonable NDA will be signed.

protomyth 10y ago
> An NDA seems reasonable in this case. Why is an NDA reasonable? I am really curious of the mechanics of a startup that would make this different from any other company under that law.
- potatolicious 10y ago
  Without knowledge of the law in this specific case, it still feels like there are reasonable grounds that a private, not-publicly-traded company should be allowed to keep its financials private. Though of course, any such NDA should be revealed ahead of time, including the precise language of the NDA, so that investors (and yes, employees who receive equity in lieu of cash are investors) make a fully informed decision.
  - jessaustin 10y ago
    ...any such NDA should be revealed ahead of time, including the precise language of the NDA... Is this a common thing with NDAs? ISTM it's rare that during the hiring process one would receive a folder containing all the NDAs one might potentially be asked to sign while working at a firm. One might receive an "initial" NDA, to sign before starting, but every time there is an ownership change one can expect a new round of NDAs, because apparently NDA terms are a rapidly-evolving area of contract law.
    - toast0 10y ago
      Requiring a new NDA as a condition (but not prom is) of continued employment is one thing; requiring it as a condition of exercising a statutory right is another.
  - toufka 10y ago
    The law seems to indicate otherwise.
  - bpicolo 10y ago
    Pretty hard for him to convince anybody to buy said shares if they can't in any way see those financials.
    - adrr 10y ago
      They can buy 1 share or he could give them 1 share.
      - bpicolo 10y ago
        That's true, sure seems like it shouldn't be necessary though huh?
      - zwily 10y ago
        He may not be able to sell or transfer any shares.
  - revelation 10y ago
    Why? It's a company, why should company fundamentals be protected? What's going on in this world where your phone call is recorded, yet people sheepishly suggest "oh maybe a NDA is okay here, ya know".
  - nradov 10y ago
    Sure they can keep their financials private by requiring a signed NDA before distributing shares. But if they're asking for an NDA after granting shares then it's too late. What incentive would the shareholder have to sign away certain rights in order to gain access to financial records to which he is already entitled? In order for an agreement to be valid and legally enforceable it generally has to provide some specific benefit to both sides.
- pbreit 10y ago
  Because a startup is private?
  - protomyth 10y ago
    The quoted law doesn't look to make any special provision for that. I'm not sure if that's an oversight or intentional.
  - kbenson 10y ago
    But as part owner of the company through stock, the former employee is free to disclose whatever they like, unless specifically contracted to do otherwise, aren't they? Don't want all your private company secrets legally broadcast to the public? Be careful who you grant shares of ownership to. Can't trust your employees? Guess you have to find something besides ownership to incentivize them with.
  - rhizome 10y ago
    Does the word "equity" mean anything anymore?
frugalmail 10y ago
An NDA would be reasonable if they had the option. Since he's legally entitled to the financials why would he agree to limit his rights for nothing in exchange?
mcherm 10y ago
Sure, of COURSE asking him to sign an NDA is reasonable. But when he chooses NOT to sign it (for whatever reason, it doesn't matter why) what then? The law in DE states that he has a right to see the data anyway if he has a valid reason, and "valuing my shares for tax reasons" is a valid reason. So NDA or not, the company needs to show him the numbers.
mannykannot 10y ago
Assuming (purely for the sake of argument) that a case might be made for some form of NDA, it seems that the law does not permit the company to avoid its responsibility on the grounds that no NDA has been signed.

protomyth 10y ago

> An NDA seems reasonable in this case. Why is an NDA reasonable? I am really curious of the mechanics of a startup that would make this different from any other company under that law.

potatolicious 10y ago
Without knowledge of the law in this specific case, it still feels like there are reasonable grounds that a private, not-publicly-traded company should be allowed to keep its financials private. Though of course, any such NDA should be revealed ahead of time, including the precise language of the NDA, so that investors (and yes, employees who receive equity in lieu of cash are investors) make a fully informed decision.
- jessaustin 10y ago
  ...any such NDA should be revealed ahead of time, including the precise language of the NDA... Is this a common thing with NDAs? ISTM it's rare that during the hiring process one would receive a folder containing all the NDAs one might potentially be asked to sign while working at a firm. One might receive an "initial" NDA, to sign before starting, but every time there is an ownership change one can expect a new round of NDAs, because apparently NDA terms are a rapidly-evolving area of contract law.
  - toast0 10y ago
    Requiring a new NDA as a condition (but not prom is) of continued employment is one thing; requiring it as a condition of exercising a statutory right is another.
- toufka 10y ago
  The law seems to indicate otherwise.
- bpicolo 10y ago
  Pretty hard for him to convince anybody to buy said shares if they can't in any way see those financials.
  - adrr 10y ago
    They can buy 1 share or he could give them 1 share.
    - bpicolo 10y ago
      That's true, sure seems like it shouldn't be necessary though huh?
    - zwily 10y ago
      He may not be able to sell or transfer any shares.
- revelation 10y ago
  Why? It's a company, why should company fundamentals be protected? What's going on in this world where your phone call is recorded, yet people sheepishly suggest "oh maybe a NDA is okay here, ya know".
- nradov 10y ago
  Sure they can keep their financials private by requiring a signed NDA before distributing shares. But if they're asking for an NDA after granting shares then it's too late. What incentive would the shareholder have to sign away certain rights in order to gain access to financial records to which he is already entitled? In order for an agreement to be valid and legally enforceable it generally has to provide some specific benefit to both sides.
pbreit 10y ago
Because a startup is private?
- protomyth 10y ago
  The quoted law doesn't look to make any special provision for that. I'm not sure if that's an oversight or intentional.
- kbenson 10y ago
  But as part owner of the company through stock, the former employee is free to disclose whatever they like, unless specifically contracted to do otherwise, aren't they? Don't want all your private company secrets legally broadcast to the public? Be careful who you grant shares of ownership to. Can't trust your employees? Guess you have to find something besides ownership to incentivize them with.
- rhizome 10y ago
  Does the word "equity" mean anything anymore?

frugalmail 10y ago

An NDA would be reasonable if they had the option. Since he's legally entitled to the financials why would he agree to limit his rights for nothing in exchange?

mcherm 10y ago

Sure, of COURSE asking him to sign an NDA is reasonable. But when he chooses NOT to sign it (for whatever reason, it doesn't matter why) what then? The law in DE states that he has a right to see the data anyway if he has a valid reason, and "valuing my shares for tax reasons" is a valid reason. So NDA or not, the company needs to show him the numbers.

mannykannot 10y ago

Assuming (purely for the sake of argument) that a case might be made for some form of NDA, it seems that the law does not permit the company to avoid its responsibility on the grounds that no NDA has been signed.