Legal Insights: Board Confidentiality and Communications
Protection for Corporate Information
Recent developments in Delaware case law highlight the importance for companies of periodically reviewing and updating their corporate governance policies and procedures to protect confidential corporate information provided to directors, as well as board communications and deliberations, from both intentional and inadvertent disclosure outside the company. Practical Law asked Jennifer T. Wisinski of Haynes and Boone, LLP for guidance on adopting and updating corporate governance policies that address board confidentiality and communications.
Why is it important to address director confidentiality and communications in a company’s corporate governance policies? A confidentiality policy specifically applicable to directors (board confidentiality policy) serves to inform and remind directors of the importance of confidentiality. A board confidentiality policy is important because most general confidentiality policies define “confidential information” to include “material, non-public information.” However, this definition does not necessarily cover all information provided to directors, board deliberations, or communications between and among directors and the company. In addition, the scope and parameters of a director’s duty of confidentiality are not well defined under Delaware law. Maintaining the confidentiality of this information is critical not only to protect the company from competitive or other harm, but also to protect the integrity of the boardroom and board process.