When they are performing their fiduciary obligations as directors as well as board members, board members are charged with a wealth of confidential information about their companies. Some of this information falls into the category of non-public material data, whose disclosure is controlled by law and corporate policies. Other information, particularly in the context for-profit companies are extremely sensitive and private. The fact that some of the information discussed in boardroom deliberations is both sensitive and material can create a trust issue when it comes to protecting that data from leaks.
Leaks are devastating for companies and their employees. They are not just able to affect the financial performance of the company as well as the reputation of the directors themselves. Based on the nature of the leak (and the circumstances that lead up to it) they could expose directors to civil or criminal liability.
The best method to safeguard confidential documents for boards is to ensure that all parties to the confidentiality agreement are aware of what information must remain confidential, and have agreed to abide by those terms. This requires identifying the information that needs to be protected and clearly defining restrictions on disclosure. For example, it may be that the information could only be disclosed to the sponsor of the company or other directors.
Additionally it is vital to have a strong and detailed Confidentiality Policy that is distributed to all directors (and their sponsors in the case of constituency directors) before they start serving. This will assist them in understanding their responsibilities and help create an her response environment where confidentiality is viewed as an essential element of the director’s duties.