How to Protect Confidential Documents for Boards

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Board members are entrusted with a lot of confidential information from their companies in the course of their fiduciary duties as directors. Some of this information falls under the category of material non-public data, which is controlled by corporate policies and law. Other information, particularly in the context for-profit companies, is highly sensitive and private. The fact that some of the information that is discussed in boardroom discussions is both sensitive and important raises trust issues when it comes to protecting that data from leaks.

Leaks can be catastrophic to an organization and the people affected, and they may not only hurt the company’s financial performance, but can also affect the reputation of individual directors. Based on the nature and circumstances of the leak, directors may be exposed to criminal or civil liability.

It is best to ensure that all signers understand the nature of information that must remain private and agree to abide by these conditions. This involves identifying the specific information that needs to be protected and clearly defining the restrictions on the disclosure of this information, for instance, that it can only be shared with other directors, or the company’s sponsor.

Additionally, it is important to include a thorough and detailed Confidentiality Policy that is made available to all directors (and their sponsors in the case of constituency directors) before they start serving. This will ensure that they are aware of their responsibilities and help to create an environment that encourages respect for and the protection of confidential information as one of the most fundamental aspects of a director’s responsibility and duties.