In the course of fulfilling the fiduciary duties of directors and board members, they are entrusted with a great deal of confidential information about their businesses. Certain of this information falls under the category of non-public material data, which is governed by law and corporate policies. Other information, especially when it comes to companies that are for-profit are highly sensitive and private. Some of the information discussed in boardroom discussions is both sensitive and important which can create the possibility of trust issues when it’s time to safeguard that data from leaks.
Leaks can be catastrophic for the company and its employees. They not only harm the financial performance of the business but also the image of the directors themselves. Depending on the type and circumstances of the leak, directors could be liable for civil or criminal liability.
It is important to ensure that all signees know the nature of information that must remain private and that they agree to these conditions. This involves identifying the information that needs to be protected and clearly defining restrictions on disclosure. For instance it could be that the information can only be shared with the sponsor of the company or other directors.
Additionally, it is important to have a strong and detailed Confidentiality Policy that is made available to all directors (and their sponsors in the case of constituency directors) prior to their beginning their service. This will ensure that they are aware of their responsibilities and help establish an environment that encourages respect for and the protection of confidential information as one of the most important aspects of a director’s duties and obligations.
