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Avoiding the Pitfalls of Electronic Board Books

Sullivan & Cromwell highlights some potential legal issues with the prominent use of electronic board portals in a recent post. Though technology can in some ways ease the burden of reviewing ever expanding board books, the post notes two potential concerns. First, whether offering materials only electronically may restrict a director’s ability to properly assess and absorb complex information (a view which the post posits may be due to personal preferences). Second, records that reflect the amount of time spent and level of interaction with the materials, as well as distractions encountered during the same time period (through sources such as phone or email logs) may be subject to discovery and may be used by plaintiffs in litigation.

The post offers several recommendations for boards that use electronic portals for board information, including:

  • Making hard copies of the materials available for those that prefer that format.  The authors suggest making available at least the more complex information in a paper format.
  • Avoiding last minute distribution of information, unless necessary.
  • Providing training regarding the functionality of the electronic portal and also on the level of attention and focus necessary for reviewing materials.
  • Considering how data retention policies of the electronic portal provider work with the company’s generally applicable document retention policies.