India:
Decoding Boardroom Dilemmas (Part III): Can Nominee Directors Share UPSI With Nominating Shareholders?
22 August 2022
Resolut Partners
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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unpublished price sensitive information (UPSI), with their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?
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