As with outside directors, inside directors still have a fiduciary duty to the company and are expected to always act in the company’s best interests.
A company should have a balance of both outside and inside directors. While outside directors can provide valuable and distinct perspectives, inside directors have the advantage of knowing the company’s inner workings, culture, history, and issues that need solving in real-time.
Inside directors can be current employees, officers, or direct stakeholders in the company. More specifically, they typically include a company’s top executives, such as the chief operating officer (COO), the chief financial officer (CFO), and the chief operating officer (COO), and representatives of major shareholders and lenders, such as institutional investors with sizable investments in the company.
In this case, the majority shareholder will often insist on appointing one or more representatives to the company’s board of directors.
As with outside directors, inside directors still have a fiduciary duty to the company and are expected to always act in the company’s best interests.
From the Book – ‘ Know Everything about Corporate Social Responsibility ‘
Available on Amazon.in
Also Read:
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- What is the Public Enterprise?
- What is a Private Firm?
- What is Family Owned Business?
- What is Corporate Financial Performance?
- What is Profit?
- What is Bottom of the Pyramid?
- What are the Basics of Corporate Structure?
- What is Corporate Governance?
- What is E-Governance?
- What is Status of E-Governance in India?
- Corporate Governance and the Board of Directors
- Who is an Independent Director?
- Understanding Independent Directors
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