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A recent Federal Court decision has put a sharp spotlight on what “disclosure” really means during M&A (see this great write up by Clayton Utz on the case). In Bridging Capital Holdings v Self Directed Super Funds, the court held that simply uploading material documents into a data room is not sufficient disclosure if it’s not brought to the receiving party’s attention and contradicts other representations made.
The case should be a wake-up call for any company entering into due diligence, whether you’re a founder preparing for an exit, a CFO handling complex and large amounts of financial information or a corporate advisor looking to ensure their clients’ deal success.
It’s all too common for companies to upload large amounts of documents into a data room and assume the responsibility of “finding” them shifts to the potential acquirer or investor. This case has shown that making such an assumption is risky. If there is material information that impacts a deal (e.g. major customer churn, new litigation or financial downturn) then simply uploading that information to a data room without clearly bringing it to a buyer/investor’s attention is unlikely to protect, especially if you’ve made contradictory representations in meetings or emails.
The court emphasised that disclosure in a data room must be coupled with clear notification, ensuring the other party is aware of the specific update and its relevance to the transaction. Failing to do so can expose your company to claims of misrepresentation, potentially leading to damages or winding back of deals.
✅ Disclosure requires clear notice: It is not enough to say, “It was in the data room.” If a buyer isn’t clearly directed to the material information, you may still face claims of misrepresentation.
✅ Risk management: Legal and financial teams must align on what constitutes a material update, ensuring proactive disclosure practices.
✅ Buyer confidence: Transparent disclosure practices reduce legal risks and strengthen buyer and investor confidence, supporting smoother negotiations and cleaner exits.
At Tallystone, we understand that virtual data rooms are more than storage, they are a channel of communication during critical transactions.
✅ Version control automatically tracks and logs every document update, ensuring you know exactly what has changed and when, with a clear audit trail to avoid confusion between outdated and current documents
✅ Material document tagging allows you to flag critical documents and updates so they are front and centre for potential buyers or investors, ensuring material information is not missed and demonstrating proactive, good faith disclosure.
✅ Active notification capabilities ensure stakeholders are informed of critical updates, moving you beyond “upload and forget” into confident, compliant disclosure practices.
The message from this case is clear: you can’t hide updates in a data room and expect that to be enough. With Tallystone, you can manageyour data room as a living part of your deal readiness strategy, reducing legal risk, enhancing trust, and ensuring material updates are seen when it matters most.
Contact us to see how Tallystone can help you prepare for your next deal with confidence.