The Jensen Huang Test: When to investigate, When to act, and what Indian Boards must learn
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On Sunday, 8 November 2026, Nvidia's board publicly expressed its "confidence" in its chief executive, Jensen Huang. [1] By Wednesday night, he had resigned as president, chief executive and director of the company he co-founded in 1993. [2] In our view, those three days hold the year's most instructive governance lesson.
In one week, Nvidia's board showed where it draws the line between conduct a board must investigate and conduct it cannot accept. Indian boards should take note, because our law would make that line much harder to hold.
A note on facts. Mr Huang has publicly admitted his relationship with Alice Huang. [3] The reported relationship with Kimberly Powell, the alleged non-disclosure agreement and a reported third relationship are based on press reports that cite unnamed sources, and Nvidia has not confirmed them. [4] [5] We therefore treat them as allegations throughout.
What happened, in brief
On 29 October 2026, the New York Times reported Mr Huang's close relationship with Alice Huang, an executive linked to Megaspeed, a company under US and Singapore investigation for possible export-control breaches. A US government memo reportedly identifies her as a Chinese intelligence agent. [6] On 8 November 2026, Mr Huang admitted the affair, and the board announced an independent investigation while expressing confidence in him. Two days later, the independent directors appointed Joon H. Kim, a former acting US Attorney, and Wachtell Lipton to examine whether Mr Huang had been targeted by foreign intelligence and whether any company secrets had been compromised. [7]
On 11 November 2026, the Times reported a relationship with Kimberly Powell, Nvidia's Vice President of Healthcare, who reported directly to him. It also said a hotel guest who had filmed the two was asked to sign a non-disclosure agreement. [8] The board met that evening, and Mr Huang resigned. The next day, Nvidia's Form 8-K, a filing with the US Securities and Exchange Commission, recorded his resignation as president, CEO and director and named CFO Colette Kress as interim CEO. It gave no reason and said nothing about severance or his equity. [9]
Why one allegation got an inquiry and the other got the door
On the reported facts, the Alice Huang matter is more alarming. Yet the board let Mr Huang keep running the company while independent counsel investigated. We think that was right.
An extramarital relationship is a private failing, not a breach of duty to the company. It becomes a governance issue only if something flowed from it: confidential information shared, export controls avoided, a favour returned. A board that removed a founder-CEO before establishing them would have been acting on headlines.
The Powell allegation is different. If the report is accurate, the breach was complete the moment the relationship began without being disclosed. Nvidia's Code of Conduct lists "Investments or personal relationships" among potential conflicts and requires those affected to "immediately remove ourselves from any decision-making role in the matter." [10] A CEO cannot step away from decisions about his own direct report; he is the one who makes them. There was simply nothing left to investigate.
A glass ceiling nobody else could see
Between equals, a consensual relationship is a private matter. When one reports to the other, and the other is the CEO, it is the company's business.
Her pay, budget, promotions and visibility before the board all depended on one man. Every peer competing for the same opportunities was unknowingly competing against someone with a private line to the decision-maker. That is a glass ceiling in the truest sense: invisible to those beneath it, and impossible to challenge because nobody knew it existed.
Disclosure rules exist to prevent this. Had the relationship been declared, her reporting line would have changed, others would have decided her pay and her rise would have been limited while he remained CEO. Because disclosure carries that cost, it is least likely at the top, so the board must respond firmly when it fails there. The alleged non-disclosure agreement makes matters worse: it turns a lapse of judgment into concealment.
Is this a breach of fiduciary duty, an officer's duty of loyalty to the company? Delaware law, which governs Nvidia, is unsettled. In In re McDonald's Corporation Stockholder Derivative Litigation (Del. Ch., January 2023), Vice Chancellor Laster held that "Sexual harassment is bad faith conduct. Bad faith conduct is disloyal conduct." [11] [12] In Brola v. Lundgren (Del. Ch., 1 December 2025), Vice Chancellor Will took a narrower view: workplace misconduct is a fiduciary matter only where the officer abuses "the specific delegated authority of his corporate office." [13] A consensual relationship is not harassment, but in our view the Brola test is met here. A CEO deciding his partner's pay and promotion uses the very authority his office gives him, in a matter where he is personally interested.
Delaware acted overnight. Could India?
Nvidia's bylaws let a majority of directors remove the CEO with or without cause, and Mr Huang owns about 3.6% of the company with no special voting rights. [14] Under Delaware law, as in the UK, only shareholders can remove a director, but executive directors usually agree in advance to leave the board with the job.
India once achieved this through the statute itself. Under Section 283(1)(l) of the Companies Act, 1956, a director who had been appointed because he held an office or employment in the company automatically lost his board seat when that office or employment ended. [15] A managing director [16] who was removed from his executive role therefore left the board with it.
Its replacement, Section 167(1)(h) of the Companies Act, 2013, applies the same rule only where the office or employment is held in a holding, subsidiary or associate company. [17]
The company itself is no longer mentioned. A managing director who loses his executive role in the very company on whose board he sits therefore keeps his seat. Commentators call this a drafting gap, and the Company Law Committee declined to correct it in 2016. A public company cannot fix it through its articles either, because Section 167(4) allows only private companies to add grounds for vacating a director's office. [18]
An Indian board can therefore end a CEO's executive role overnight, but not his board seat. Unless he resigns, he can be removed as a director only by the shareholders, through an ordinary resolution passed after giving him a reasonable opportunity of being heard under Section 169(1). [19]
This needs a special notice and a shareholders' meeting, and the director may have written representations sent to every shareholder. In Invesco Developing Markets Fund v. Zee Entertainment Enterprises Ltd. (22 March 2022), a Division Bench of the Bombay High Court confirmed that a board must call such a meeting when validly requisitioned. [20] The route works, but for weeks a CEO removed for misconduct keeps his seat and board papers. Restoring the company itself to Section 167(1)(h) is a one-line amendment the Ministry of Corporate Affairs should make.
Would Indian law even catch it?
Section 166(4) of the Companies Act, 2013 prohibits a director from putting himself in a position where his personal interest clashes, or could clash, with that of the company. [21] Here, Indian law and the reasoning in Brola arrive at the same place. An officer who keeps a personal interest hidden, while that interest shapes decisions his office entrusts to him, is no longer acting wholly for the company. Whatever label one attaches to it, that is a failure of loyalty. In our view, a managing director who conceals a relationship with someone reporting to him falls squarely within Section 166(4).
The detailed disclosure rules, however, are designed for a different kind of interest. Section 184(1) asks directors to declare their stakes in companies, firms and other bodies, [22] and Regulation 26(5) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 asks senior management to report material financial and commercial transactions in which they are personally interested. [23] These are interests that leave a paper trail: shareholdings, contracts and payments that can be listed, cross-checked and verified in an audit. A personal relationship leaves no such trail. It cannot be reconciled against a ledger, and a form asking employees to answer yes or no will rarely bring it to light. What it needs is a workplace culture in which people feel able to come forward, and a process that handles what they share with discretion and sound judgment. Nor does the POSH Act, 2013 help, because a consensual relationship is not harassment, per se.
This is where the code of conduct required by Regulation 17(5) earns its place. [24] In practice, most companies go well beyond the code, with detailed workplace policies run by their human resources teams. These explain which relationships must be declared, to whom, how the information is kept confidential, and what follows, such as a change in reporting line. The statute lays down the principle; these internal policies are what make it work day to day.
We have seen this before
Flipkart offers the closest Indian parallel. When Binny Bansal left in 2018, Walmart's statement said its investigation "did not find evidence to corroborate the complainant's assertions" but did find "lapses in judgement, particularly a lack of transparency." He left because of what he (allegedly) had not told the board.
ICICI Bank shows what can follow an exit. Chanda Kochhar's early retirement was accepted on 4 October 2018. After an inquiry by Justice B.N. Srikrishna, a retired Supreme Court judge, the board on 30 January 2019 treated her exit as a termination for cause and sought the return of her bonuses. The Bombay High Court dismissed her writ petition on 5 March 2020, holding that "ICICI is not an authority under Article 12 of the Constitution of India."
McDonald's went further. Steve Easterbrook was dismissed without cause in 2019 over a consensual relationship with an employee. The company later sued him over misconduct and lies it had uncovered, and in 2021 he returned more than $105 million. [25]
For Nvidia, whose 8-K is silent on severance, equity and cause, a resignation accepted today could look very different once Wachtell reports.
What we would tell an Indian board this week
First, make sure the rules on relationships reach the very top. The code of conduct and the company's workplace policies should require any relationship across a reporting line to be declared, identify who receives the declaration when it comes from the CEO (ideally the audit committee chair), and explain what happens next.
Second, have every executive director sign an undertaking, on appointment, to resign from the board on leaving the executive role. Under Section 167(4) it cannot operate automatically in a public company, and Section 169 remains the fallback, but most executives honour a signed undertaking.
Third, decide in advance which allegations need an inquiry. Harm that turns on consequences does; a clear breach of a disclosure rule does not.
Fourth, accept resignations without prejudice, reserving in writing the right to treat the exit as being for cause and to recover benefits later.
Finally, have a succession plan that could be used on a Wednesday night. Regulation 17(4) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 already requires one. [26] Nvidia was left with its CFO doing two jobs. [27]
A closing thought
Much of this week's commentary has focused on Mr Huang's achievements and missed what the board got right. It gave the serious but unproven allegation time, and the reported breach of a basic disclosure rule none. Telling the two apart, quickly and in public, is what a board is for. An Indian board would face the same choice, under a law that makes it harder to act.
The views expressed are personal, offered for discussion only, and do not constitute legal advice. All facts and allegations are drawn from publicly available sources, which we have not independently verified, and are not based on any inquiry conducted by us or on any non-public information. Save for what Mr Huang has publicly admitted, the allegations have not been established, and nothing in this article is intended to suggest wrongdoing by any person named in it. References to other companies and individuals rely on their public statements, filings and court records.
