Module 2 · Chapter 5

The Investor Director

A director nominated by an investor owes her duties to the company. If the investor may back a competitor, she must say so, and the board sets the terms on which she stays.

≈ 10 min read 8-question test

In this chapter

  • Why a director nominated by an investor still votes for the company
  • How the board lets a director stay in a conflict, on conditions
  • How an information barrier keeps the company's secrets in

5.1The investor director in one paragraph

An investor that buys a large stake in a company often has the right to nominate a director. That director wears two hats, because she works for the investor and sits on the company's board. Her duties run to the company alone.

If the investor's plans could clash with the company's interests, she must tell the chair at once. The other directors can then let her stay, on conditions.

Key point

The right to nominate a director is a right to choose the person. It is not a right to cast her vote.

Also in this chapter

  1. Why an investor wants a seat on the board
  2. A conflict with no deal in it
  3. Telling the chair at once, in writing
  4. Authorising the conflict on conditions
  5. Closing both routes to the investor
  6. Review, and lifting the conditions
  7. If the investor had gone ahead
  8. Your job

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