Directors' Duties In India: Shareholders Or Stakeholders?

The recent decision of Delaware's Chancery court invalidating the grant of performance stock options to Elon Musk awarded by the board of directors of Tesla has reemphasized the nature of duties entrusted with directors. The directors of a company are its trustees and agents as they are responsible for ensuring the viable, successful, and sustainable operations of the company. By virtue of acting as a trustee or agent, the directors bear a relationship of trust towards the company, hence, the duties owed by them are termed as fiduciary duties.

While it is certain that directors cannot act in their self-interest, there has been some debate on the subject of whose interests are the directors obligated to protect in the conduct of their duties. The relevance of this debate may be understood in light of the diametrically opposite views on ESG investments. For instance, a significant number of US states have discouraged investment decisions based on environmental or