Should corporate secretaries retain or destroy their documents?
A corporate secretary’s job involves producing confidential information for board meetings and storing that information. Over time, as information accumulates, corporate secretaries can feel overwhelmed by it; and they can find it difficult to decide whether they should retain or destroy certain documents.
According to a recent Thomson Reuters board governance survey, corporate secretaries prepare and disseminate an average of 6,000 pages of sensitive materials to their board each year. Indeed, two of the survey respondents claimed to be creating more than 200 board packs a year; the average pack contained 132 pages of documents, but some ran to as many as 600.
There is a significant volume of highly sensitive and confidential material being distributed and stored – board books, committee materials and financial documents – yet 61 percent of corporate secretaries still deliver their board documents in paper form via courier, the report states.
Corporate secretaries also have to contend with email, another important part of the information process. They often communicate with board members via this medium but it is easy for an email system to become disorganized. In fact, poor email management can lead to security breaches, legal risks and hefty fines for the company. The survey notes that 49 percent of those polled say that despite the lack of a secured environment, e-mail remains a preferred means of distribution of sensitive board materials.
How do you distribute board packs/board books? (You may select more than one)
Source: Thomson Reuters 2011 Board Governance survey
Evidently, whether online or hard copy, documents tend to multiply, which can easily lead to accidents - particularly if they fall into the wrong hands.
‘The primary problem in information management is there’s too much [information],’ says Ralph Losey, a partner at Jackson Lewis, a nationwide law firm. ‘In one year’s time, your information can accumulate and [amount to] 100,000 emails.’
Risks associated with destroying information
‘Once you are served with a subpoena, the law requires you to save the information and if relevant and requested you may be required to produce it in court’ adds Losey, who is also the Florida-based firm’s national E-discovery counsel. ‘Judges don’t like it when evidence is destroyed.’
If a corporate secretary wants to destroy information, it must be on the basis of a proper system. ‘You can archive bylaws, but there is no need to save records (such as physical board documents) a minute longer than you have to,’ says Losey. ‘If you destroy evidence in good faith, a judge will rule that out. Judges are always looking to see what your company’s document retention policy is.’
Nuts and bolts of creating a retention policy
Losey provides the following suggestions to help corporate secretaries effectively manage their flow of information.
(i) Make sure records are appropriately stored: Talk to members of the information technology department to help you find ways to better store documents.
(ii) Preserve records of former employees: Most companies have a 60-day retention policy before wiping out information.
(iii) Determine legal retention requirements for different types of document: Usually companies already have this system in place;
it’s just a matter of deciding how record retention applies to electronically stored information (ESI), primarily email. Companies need to ask how long they want to save emails for and how long the law requires that they save them.
(iv) Give higher priority to key executives’ documents: Typically, the more senior the member of management, the longer their work should be saved. Chief executives and general counsels will need to save their emails and other information for many years because their projects can take so long to reach completion.
(v) Three-second rule: It shouldn’t take longer than three seconds for an employee to file an email or document. If it takes more than that, it’ll never be filed. Lawyers are better than the average employee when it comes to saving documents, but they have other important aspects of their jobs to attend to.
(vi) Train employees well: Your employees in the legal department should be aware of the company’s retention policy and know what is expected of them when it comes to handling important documents.
Losey also stresses that when the law requires the legal department to save a document, a corporate secretary or general counsel should not feel compelled to save a paper printout. In fact, having all of their important information on an ESI system and printing out files (at the same time) just contributes to having too much information on hand.
