According to the categories of access, all information is divided into open (public) and information limited in access. Check the importance of the duty of confidentiality board of directors below.
What Is Regarded to Confidentiality Board of Directors?
Confidential information includes that information, access to which is limited by federal laws. The objectives of the restrictions are different. For example, protection of the foundations of the constitutional order, morality, health, rights, and legitimate interests of certain persons, ensuring the country’s defense and state security. Confidentiality means that a person who has access to certain information has no right to transfer such information to other persons without the consent of its owner.
The most surprising thing is that the duty of a confidentiality board of directors is taken under the condition of a lack of understanding of the relationship of corporate governance with the efficiency of companies and an understanding of how the boards of directors actually work. Paradoxically, against the backdrop of increased regulation and coverage of the management of private companies, our knowledge in this area has increased only marginally. This is explained by the fact that it is very difficult to study boards of directors. Of all the significant institutions of society, they are perhaps the most closed. Their meetings rarely, if ever, take place in front of open doors, and outsiders are rarely invited to attend.
It should be noted that the regulation on the board of directors’ confidentiality, the regulation on the sole executive body, as well as other documents of the joint-stock company (regulation on the dividend policy or information policy) are not mandatory due to legal requirements. Society at its own discretion decides whether to accept these documents or not. In any case, their content should not contradict the provisions of the charter of the joint-stock company and the requirements of the law.
Are Board Papers Confidential?
Most of the work devoted to boards of directors, and there has been a whole library of those in recent years, is limited to the analysis of information that is in the public domain – annual reports, documents submitted to regulatory bodies, and corporate press releases. As a result, these papers cover main issues related to the structure and composition of the board of directors: the combination of the positions of the chairman of the board and the general director, the proportion of independent directors, the number of the board, the structure of the committees and the degree of their independence.
The main objectives of creating regulatory confidentiality are:
- Reducing regulatory uncertainty and mitigating the risks of violation of the legislation.
- Elaboration and formation of a legal framework for new technologies.
- Reduced time to market for new solutions.
- Increasing the investment attractiveness of companies.
- Possibility of early detection and filtering out of non-working models.
- Retaining control by the regulator.
- The Board of Directors exercises control over the disclosure of information by the company, as well as over the provision of information to shareholders.
- The board of directors approves the information policy of the company, which should provide for the observance of a reasonable balance between the openness of the company and the observance of its commercial interests.
- Current control over compliance with the requirements of the legislation regarding the disclosure of information on the company’s activities.
The success and long-term functioning of the business depend on how the rights and obligations of all participants in the activities of the joint-stock company (shareholders, board of directors, executive bodies) are secured.