Mumbai – 400051
August 5, 2022
Once an institutional shareholder has nominated a director, there is a natural expectation for the shareholder to receive information about the target company so that their collective interests are protected by the nominee director.
But is such information flow protected under law, and can nominee directors legitimately share insider information, known as unpublished price sensitive information (UPSI), with their nominating shareholder?
In this edition of Decoding Boardroom Dilemmas, we explore the legal and practical nuances surrounding a frequented, yet rather ambiguous part of the law. More foundationally, we ask: if nominee directors are completely constrained from prioritising their nominators’ interests, why recognise rights to nominate directors in the first place?