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When they are performing their fiduciary duties as directors Board members are entrusted with a large amount of confidential information regarding their businesses. Some of this information is important non-public information – the disclosure of which is controlled by law and company policies – while other information especially in the context of for-profit businesses is extremely sensitive and personal. Certain information discussed during boardroom discussions is highly sensitive and crucial that creates a trust issue when it’s time to protect the information from leaks.
Leaks can be devastating to a business and the people involved. They may not only hurt the financial performance of the company but can also harm the reputation of the individual directors. Depending on the nature of the leak (and the circumstances that lead up to it), they may even expose directors to civil or criminal liability.
It is recommended that all signees know what information must remain confidential and agree to follow these terms. This includes identifying the information to be protected and clearly defining the restrictions on disclosure. For example it could be that the information could only be disclosed to the sponsor of the company or other directors.
Additionally it is crucial to include a robust and detailed Confidentiality Policy that is given to all directors (and their sponsors in the case of constituency directors) prior to the time they begin their tenure. This will ensure that they are aware of their obligations and help to create a culture that values the commitment to and confidentiality of information as one of the most important aspects of a director’s responsibility and obligations.