On one of my Linkedin groups, someone posted an interesting question:
Is it unreasonable for a major shareholder of a listed public company to enquire if a newly board nominated director had met with any of the Company's shareholders, in order to gain some insight about their concerns, if any, about it's governance?
I think so, for the reasons set out in my response:
The American Bar Association's Committee on Corporation Law's Directors Guidebook claims that "Since its initial publication in 1978, directors, business executives, advisors, students of corporate governance, and others have all come to rely on the advice and commentary in the Guidebook. Indeed, the Guidebook is the most frequently cited handbook in its field."
In relevant part, the Guidebook states that: "Increasingly, boards--and, as directed, board committees--engage in periodic communications with shareholders. Board efforts to enhance shareholder communication and dialogue require sensitivity to director confidentiality requirements, as well as federal regulations on “selective” disclosure. In light of such obligations, individual directors should understand and abide by the board's policies on confidentiality and selective disclosure and avoid responding to shareholder inquiries or communicating with any shareholders. Instead, shareholder communication and engagement should be undertaken on a coordinated and not an ad hoc basis."It also opines that the board's nominating "committee should be the conduit for communication regarding shareholder recommendations for director nominees."
