In the course of performing the fiduciary duties of directors as well as board members, board members are charged with a wealth of confidential information about their businesses. Certain of this information falls within the category of material non-public data, which is subject to the corporate policies and law. Other information, particularly in the context for-profit companies are highly sensitive and private. Certain information discussed in boardroom discussions is both important and sensitive which can create the possibility of trust issues when it’s time protect that information from leaks.
Leaks can be devastating to companies and their employees. They can not only impact the financial performance of the company, but also the reputation of directors. The nature of the leak (and the circumstances surrounding it) they could expose directors to civil or criminal liability.
It is important to ensure that all signees understand the information that must be kept confidential and agree to follow these guidelines. This requires identifying the information that needs to be protected and clearly defining restrictions on disclosure. For example it could be that the information may only be divulged to the sponsor of the company or other directors.
It is equally important to give a comprehensive and complete Confidentiality policy for directors in general, or their sponsors in the case of constituency directors, before they begin their duties. This will ensure that they are aware of their obligations and will help create an environment that encourages compliance with and the protection of confidential information as one of the most important aspects of a director’s responsibilities and duties.
