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A Disclosure Letter accompanies a major business agreement, typically during mergers or acquisitions in Hong Kong, to flag important facts about a company to potential buyers. It works like a safety net for sellers, letting them reveal any exceptions or qualifications to their warranties and representations in the main agreement.

Think of it as a detailed confession list - sellers can protect themselves by coming clean about everything from pending lawsuits and regulatory issues to minor contract breaches. Under Hong Kong law, these properly disclosed items generally shield the seller from future claims, as buyers can't later say they weren't warned about issues that were clearly spelled out in the letter.

Use a Disclosure Letter during any major business transaction in Hong Kong where you need to protect yourself while selling assets or shares. It's especially crucial when preparing for mergers, acquisitions, or joint ventures where the buyer will conduct detailed due diligence on your company.

The timing matters - draft your Disclosure Letter early in the transaction process, ideally as soon as you've agreed on the main sale agreement terms. This gives you time to thoroughly review company records, identify potential issues, and make complete disclosures that can prevent future disputes. Many sellers start preparing their disclosures while negotiating warranties to ensure nothing gets overlooked.

• Confidentiality And Non Solicitation Agreement: The standard comprehensive type that combines broad confidentiality protections with employee non-poaching provisions - commonly used in M&A deals.
• Confidentiality Agreement Indemnity: Enhanced version with specific indemnification clauses to protect the disclosing party against breaches and unauthorized disclosures.
• NDA Agreement For App Development: Specialized variant focused on protecting intellectual property and technical information during software development collaborations.

• Selling Companies: The main party preparing the Disclosure Letter, typically through their senior management and legal teams who know the company's details inside and out.
• Corporate Lawyers: Draft and review the letter, ensuring all disclosures are properly structured and legally effective under Hong Kong law.
• Buying Companies: Review disclosures carefully during due diligence, often with their advisory team.
• Financial Advisors: Help identify financial issues requiring disclosure and assess their impact.
• Company Directors: Must verify the accuracy of disclosures and often personally sign off on the letter.

• Review Warranties: Carefully examine each warranty in the main agreement to identify needed disclosures.
• Gather Documents: Collect all company records, contracts, licenses, and regulatory filings from the past 3-7 years.
• Draft Structure: Our platform helps organize disclosures by warranty number, ensuring nothing is missed.
• Detail Check: Include specific dates, amounts, and parties for each disclosure.
• Bundle Evidence: Attach relevant supporting documents in a disclosure bundle.
• Internal Review: Have department heads verify disclosures in their areas.

• Introduction: Clear identification of the related sale agreement and parties involved.
• General Disclosures: Broad statements covering publicly available information and company records.
• Specific Disclosures: Detailed exceptions to each warranty, numbered to match the main agreement.
• Material Contracts: List of significant agreements affecting company value or operations.
• Governing Law: Explicit statement that Hong Kong law applies.
• Execution Block: Proper signature sections for seller's authorized representatives.
• Disclosure Bundle: Index of all supporting documents referenced in the letter.

A Disclosure Letter differs significantly from a Disclosure Agreement in both purpose and timing. While both deal with sharing sensitive information, they serve distinct legal functions in Hong Kong's business environment.

• Purpose and Context: Disclosure Letters specifically support M&A transactions by documenting exceptions to warranties, while Disclosure Agreements establish ongoing rules for sharing confidential information.
• Timing and Duration: A Disclosure Letter captures information at a specific point in time during a transaction, whereas a Disclosure Agreement typically governs future information sharing over an extended period.
• Legal Protection: Disclosure Letters protect sellers from warranty breach claims by documenting known issues, while Disclosure Agreements protect the confidentiality of shared information through binding obligations.
• Structure and Content: Disclosure Letters follow the warranty structure of the main sale agreement, while Disclosure Agreements focus on defining confidential information and usage rights.