Managing the Special Committee’s Materials
directors. In view of the long-standing principle that minutes are the property of the corporation, the scope of the committee’s control over its materials must, of course, be carefully constructed with a view to the best interests of the corporation. To that end, the mandate may address the following: the rights of non-committee members to access committee materials during the course of the committee’s work; whether and the extent to which the committee is required to periodically update the board during the course of its mandate; whether the committee may control any confidentiality or privilege attaching to its materials, including any decision to disclose or waive privilege and how such decisions will be made; and whether committee members may communicate confidentially with management or regular company counsel regarding the mandate. Where appropriate, the mandate may specify the extent to which the committee’s control over its materials will continue after the committee’s work has been completed. – The committee should treat its information confidentially during the course of its mandate. The committee should handle the confidentiality of its materials with care during the course of its work. This means that minutes, materials prepared by its advisers and other committee documents should not be shared outside the committee, absent appropriate arrangements. The committee may need to engage with management and the company’s regular counsel. These communications should be carefully considered with the committee’s legal counsel to ensure confidentiality is managed and that privilege is not waived.
With the foregoing in mind, we set out the following suggestions for a board to consider when it is forming a special committee whose deliberations it wishes to remain confidential from the rest of the board. – The special committee should be authorized to engage and consult confidentially with its own independent legal counsel. Directors have access to and control the legal advice that is furnished to the corporation, which will usually include correspondence with in-house counsel and the company’s regular counsel. For example, emails between the chair and in-house counsel will ordinarily be accessible by all members of a board. Where a special committee engages its own legal advisers, a different fact pattern is created, one in which the solicitor-client relationship and the flow of communications are intended to be between the committee (not the board at large) and its legal advisers. In certain circumstances, it may be prudent to limit preliminary conversations among the board, management and company counsel (including in-house counsel) until a special committee has been formed and engages its own counsel to carry the mandate forward. – The committee’s mandate should address confidentiality and privilege vis-à-vis the other members of the board. The board should approve a written mandate for the committee, setting out its purpose and authority (including its power to retain independent advisers). The mandate should stipulate the board’s expectations regarding privilege and confidentiality between the committee and the other
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Governance Insights 2024
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