This makes him: An inside director.
An inside director refers to a board member, who is an employee or a stakeholder in a company. The major role of an inside director is to always act in the best interest of the company. Since they have the specialized knowledge about the inner activities of the company, they are important element in the success of a company.
<h2>Further Explanation</h2>
Inside directors are the top company executives such as chief financial officer, chief operating officer including major shareholders, lenders, and additional stakeholders which can be labor unions.
In a company, the inside directors cannot trade on materials information that is not public because they have access to some classified company information also called insider information.
For example, if an inside director is aware that the company will soon change its CEOs and feels that the replacement will create a weakness in the management structure, which could have adverse effect on share price and decide not to sell or short company shares before the proper announcement is made, such inside director will be punished and can spend close to 8 years in prison.
The company will also be fined heftily depending on the level of the offence and how much it affected the public.
LEARN MORE:
KEYWORDS:
- inside directors
- company
- shareholders
- board member
- employee
