Governance Insights 2024 Protecting Information to Protect Process – When is it Appropriate to Restrict a Director’s Access to Board Records?
– Where possible, the committee should be formed with the knowledge and approval of the full board. Although this is a Delaware requirement to ensure the special committee may assert privilege against non-committee directors, the rule engages principles that are also relevant in Canadian law. A director will usually have a reasonable expectation that legal advice furnished to the board will be accessible to all members. Where, with the knowledge of the excluded director, a special committee is established and authorized to engage its own counsel, the board is creating a fact pattern that would challenge the reasonableness of a non-committee member’s expectations to review the minutes. But this may not always be practical. For example, if a board is investigating one of its members, it may need to act confidentially and without the knowledge of the impugned director. In that case, an argument may be made that where a committee retains its own counsel without the knowledge of non-committee members, the excluded director would not have a reasonable basis to expect to be a client of the committee’s counsel.
Internal Investigations: A Deeper Dive
In this article, we briefly touched on intra-board issues of privilege and confidentiality in the context of internal investigations. We will discuss this issue in greater detail in a forthcoming Governance Insights article on board- led internal investigations.
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Davies | dwpv.com
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