Data Protection (Part 1) – The Principles

Data protection is one aspect when buying and selling a business that neither the Seller nor the Buyer should overlook. It is likely that whether you are buying or selling a business there is likely to be a transfer of data and with the introduction of fines of up to £500,000 for serious breaches of the Data Protection Act 1988 (DPA), Buyers and Sellers beware!

It is therefore advisable that the Buyer and Seller in any transaction should ensure that a suitable data protection policy is put in place and the Buyer should ensure the resources are in place to integrate any new data.

The articles over the comingfew weeks will set out the issues that a Buyer and Seller in a transaction should consider when buying or selling a business. In this article we cover the Data Protection Principles set out below:

The Principles

The purpose of the DPA is to ensure that the information about individuals held by organisations is adequately protected and the rights of individuals are protected. The DPA sets out 8 principles which organisations handling data:

1. Personal data shall be processed fairly and lawfully and, in particular, shall not be processed unless:
(a) At least one of the conditions in Schedule 2 to the Data Protection Act 1998 (DPA) is met and
(b) In the case of sensitive personal data, at least one of the conditions in Schedule 3 to the DPA is also met.
2. Personal data shall be obtained for one or more specified and lawful purposes, and shall not be further processed in any manner incompatible with that purpose or those purposes.
3. Personal data shall be adequate, relevant and not excessive in relation to the purpose or purposes for which they are processed.
4. Personal data shall be accurate and, where necessary, kept up to date.
5. Personal data processed for any purpose or purposes shall not be kept for longer than is necessary for that purpose or those purposes.
6. Personal data shall be processed in accordance with the rights of data subjects under the DPA.
7. Appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data and against accidental loss or destruction of, and damage to, personal data.
8. Personal data shall not be transferred to a country or territory outside the EEA unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data.

Due to the huge increase in companies holding data on some form of computer or database, business organisations need to fully understand the DPA and adopt the principles by implementing appropriate standards and procedures to enable secure process for collecting, storing, handling, transferring and using personal data.

The second article covers the preparation a Buyer and Seller should undertake before entering into any transaction.

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