As they fulfill their fiduciary obligations as directors, board members are entrusted with a wealth of confidential information about their businesses. Some of this information is classic material non-public information – the disclosure of which is controlled by corporate policies and law – and some is, especially in the case of businesses that are for profit is extremely sensitive and personal. The fact that certain information discussed in boardroom deliberations is both sensitive and material can create a trust issue in the context of safeguarding that information from leaks.
Leaks can be disastrous to an organization and the people who are affected. It’s possible that leaks will not only affect the financial performance of a company, but can also harm the reputation of individual directors. Depending on the type of the leak (and the circumstances that lead up to it), they may even expose directors to civil or criminal liability.
It is essential to ensure that all signers understand the nature of information that must remain private and that they agree to these conditions. This means identifying the specific information that needs to be protected and clearly defining any restrictions on disclosure of that information, for instance, that it should only be shared with other directors or the company’s sponsor.
It is also essential to establish a thorough and robust Confidentiality policy to directors in general, or their sponsors if they are constituency directors, before they start their service. This will allow them to understand their responsibilities and help create an environment that values confidentiality as a fundamental aspect of director’s responsibilities.
www.dataroomabout.com/how-to-protect-confidential-documents-for-boards-committees-of-association
