Directors have a fiduciary duty of loyalty towards a company. This duty is codified in Section 166(2) of the (Indian) Companies Act, 2013. Our Company Law adopts a stakeholder approach to the directors’ duty of loyalty. Under Section 166(2), a director is required to act in the best interests of “the company, its employees, the shareholders, the community and for the protection of the environment”. The policyholders of an insurance company can be brought within the ambit of the constituencies mentioned in Section 166(2) for two reasons. By applying the rule of ‘noscitur a sociis’, it seems that the expression “the community” in Section 166(2) means “the community of the company”. A “community”, in the literal sense, is capable of being attributed at least two meanings— a social cohort bound together by any commonality (such as geographical location, identity, role in a system, etc.), or an assemblage of populations that are mutually interdependent. From the history of Section 166(2) gleaned from the preparatory material on it, it is conspicuous that the legislature intended to adopt a stakeholder theory model (as opposed to the classical shareholder theory model) of the directors’ duty of loyalty in our Company Law. Under the jurisprudence of stakeholder theory, any person whose continuing participation in, or transactions with, a company is necessary for its survival is a stakeholder in that company. Consistent with this purpose, it seems proper to interpret the expression “community” in Section 166(2) to mean an assemblage of populations that are mutually interdependent. So interpreted, “the community of the company” appears to mean “the stakeholders of the company” (in the sense a “stakeholder” is understood under the stakeholder theory). It should be rather obvious that the policyholders of an insurance company are stakeholders in that company. An insurer will have no business to carry on in the absence of policyholders. Thus, policyholders are necessary for the survival of an insurance company, which qualifies them as stakeholders. Hence, it seems that the directors of an insurance company do owe the fiduciary duty of loyalty to that company’s policyholders. The IRDA Guidelines on Corporate Governance adopts a similar position. The Guidelines recognizes that directors of companies functioning in the financial sector (including the insurance industry), by accepting public liabilities for the fulfillment of certain contracts, undertake a fiduciary responsibility to protect the interest of all stakeholders. In its norms on the composition of the Board, the Guidelines state that directors of an insurance company should be competent for the purpose of protecting the interests of its stakeholders in general, and policyholders in particular. In relation to the role of the Board, the Guidelines explicitly state that the Board should consider the interests of all stakeholders, especially policyholders, while taking decisions. Practically, this has two key implications for the directors of an insurance company. Firstly, the law requires them to take the interests of policyholders into account. Their duty of loyalty extends to acting in the best interests of policyholders too. Secondly, the duty of loyalty, as expressed in Section 166(2), requires a director to act in the best interests of a number of constituencies (“the company, its employees, the shareholders, the community and for the protection of the environment”), including stakeholders (which will include policyholders, in case of an insurance company). In many cases, the interests of one constituency is likely to conflict with those of another constituency. It seems impermissible to favour the interests of one constituency over that of another. Hence, it appears that directors are required to act in a manner that maximizes the attainment of, and fairly balances on a non-discriminatory basis, the competing interests of each of the constituencies mentioned in Section 166(2)