Canada: BYOD & The Board Of Directors - Part One: A Risk To Reckon With?

Last Updated: March 25 2013
Article by Timothy Banks

The information security concerns relating to employees using their own devices for work (such as smart phones, netbooks and laptops) are a hot topic. Although "bring your own device" or BYOD is here to stay, the practice of employees using their own devices for employment duties creates information governance challenges.

What about the role of BYOD at the level of the board of directors? Corporate officers, including the corporate secretary, frequently communicate with board members through electronic means. Directors are also likely to communicate with one another between meetings through electronic means. It is not uncommon that these electronic communications may include preliminary evaluation of strategic matters, legal advice, draft employee compensation arrangements, material contracts and draft financial reports.

This post examines some of the duties of directors with respect to the use of their own devices and email accounts. Subsequent posts will set out the case for a board information governance policy and examine some of the elements of such a policy.

Is it really a problem?

Before dismissing the information governance challenges related to electronic board communications, consider the following questions:

  • How often is information sent to directors at personal email addresses or to email addresses belonging to other companies that may employ the director?
  • Does the corporation have a good handle on the device and security standards being used by directors when they are handling some of the most sensitive material non-public information of the corporation?
  • What assurance is there that third-party technology policies do not create rights in the information sent to those third-party accounts, such as, for example, when a director is employed by another company?
  • What happens if confidential information is retrieved and stored on a director's personal device and the device is lost or stolen or lacks security protection? Is the device capable of being wiped?

A director's duty of to protect corporate information

A director has a duty to bring the care, diligence and skill of a reasonably prudent person to the protection of confidential corporate information.

Directors owe a statutory duty of care in fulfilling their obligations to the corporation. Paragraph 122(b) of the Canada Business Corporations Act, RSC 1985, c C-44 (CBCA), for example, provides that directors and officers must "exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances".

In addition to the duty of care, directors of Canadian business corporations owe a duty of loyalty to the corporation. The duty of loyalty is a common law duty that has been incorporated into most corporate legislation in Canada. For example, paragraph 122(a) of the CBCA provides that every director must act honestly and in good faith with a view to the best interests of the corporation.

The Supreme Court of Canada has described this "statutory fiduciary duty" as including a duty to maintain the confidentiality of information acquired by being a director. This statutory duty also typically prohibits directors from using information acquired by virtue of their position for personal gain.

Even leaving aside the fiduciary duties of a director, a duty of confidence may arise anytime a person receives information that has a quality of confidence about it in circumstances in which there is an express or implied obligation of confidentiality.

Issues for directors to consider

The care, diligence and skill to be exercised by a reasonably prudent director depend on the circumstances. There is, therefore, no single prescriptive information governance practice that will fulfil a director's statutory duty of care. The types of controls that a director may wish to consider deploying depend on the sensitivity of the information and its importance to the corporation.

Below is a checklist of questions that a director may wish to review as part of determining whether the director's information governance practices are consistent with, and capable of, fulfilling the director's duties of confidentiality to the corporation.

Device and Network Security

  • Is the device only used by the director or is it shared with other people, such as family members?
  • Are all devices on which the director views electronic communications and material secured by a strong password (at least 8 characters containing at least one number, one capitalized letter and one symbol) and protected by anti-virus software that is frequently updated?
  • Are all devices on which the director stores corporate information encrypted? If not, are there particular types of information that should not be stored on those devices, such as personal information of employees and officers or material non-public information relating to merger discussions or financial results?
  • Is the device enabled with a remote wiping technology in the even that it is lost or stolen?
  • Is the director using the device when connected to wifi? Does the director use secure wifi connections? Is the director's home network protected by a firewall?

Account and Information Security

  • Does the director access information through a secure portal? If not, are there particular types of sensitive information that should only be available in this way?
  • Is the director receiving information through an email address to which others have access, such as an administrative assistant? Should those third parties be bound by a confidentiality agreement?
  • Is the director receiving information at a personal email address or an email address belonging to another corporation? If so, is this appropriate for all types of information? Do the terms of service of the personal email address provider or the terms of use of another corporation's email policy permit access to the email account by third parties? Are those third parties governed by confidentiality agreements?
  • Is the email account protected by a strong password? Is email encrypted when transmitted? Are email and other electronic records encrypted when stored?
  • Is the email address provided as part of a cloud-based service? If so, does the director understand what limitations there are on that service?
  • Does the director have the technical skills to understand whether information retained on the device is being collected, used or stored by other applications without the director's knowledge?

Document Management

  • Is the director storing electronic records on a third-party's system? If so, are the records password protected or logically separated from records that can be viewed by others? For example, are records received by the director stored on his or her employer's systems in a manner that would permit others to view or otherwise inspect those records?
  • Does the director print material? Is that material stored in a secure location? Who else has access to the information?

Records Retention

  • Does the director have the technical and administrative capability to comply with the corporation's records retention policy? For example, does the corporation's records retention policy require retention of emails between directors about the corporation's business for a defined period of time? Is the director able to ensure compliance?
  • If the director is using the email or electronic storage services of another corporation in which he serves as an employee, will the director have access to that email if he or she is no longer employed by that corporation? If not, has provision been made to migrate those records in the event of retirement or dismissal?


  • Does the director have the technical and administrative capability to comply with a litigation hold in the event that litigation arises and records created, retained or received by the director are responsive to the issues in the litigation?
  • Has the director mixed personal and business uses on the device in a way that will make it more likely that the director's personal records or records relating to his or her duties to another corporation will need to be inspected in the event the device must be produced for litigation purposes?
  • These issues may be daunting for directors. However, there are technological solutions. Directors may wish to consider more structured ways to receive board information, such as through secure portals or third-party cloud based board communication service providers.

In subsequent posts on this topic, I'll look at these issues from the perspective of the corporation embarking on creating information governance policies for the board.

For more information, visit our Data Governance Law blog at

About Fraser Milner Casgrain LLP (FMC)

FMC is one of Canada's leading business and litigation law firms with more than 500 lawyers in six full-service offices located in the country's key business centres. We focus on providing outstanding service and value to our clients, and we strive to excel as a workplace of choice for our people. Regardless of where you choose to do business in Canada, our strong team of professionals possess knowledge and expertise on regional, national and cross-border matters. FMC's well-earned reputation for consistently delivering the highest quality legal services and counsel to our clients is complemented by an ongoing commitment to diversity and inclusion to broaden our insight and perspective on our clients' needs. Visit:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions