Fiduciary Duties for Directors Essay Example | Topics and Well Written Essays - 1000 words

Fiduciary Duties for Directors - Essay specimen4). The law specifies that or so of the fiduciary duties of a director are care, loyalty and good faith. In good-hearted Corp v. Sutton, it was explained that directors of corporations would be regarded as agents and trustees who were required by law to act with fidelity and reasonable attention (p.6). These three duties also give rise to a fourth, but equally important affair, that of revealing. Duty of disclosure means that directors are required to disclose full and truthful discipline when they are communicating with stakeholders. The Delaware philander of Chancery has in the past stated that an obligation to the community of interest that sustains the corporation, to exercise judgment in an informed, good faith effort to maximize the corporations long term wealth creating strength (p.12). Directors of corporations that are facing insolvency owe fiduciary duties to the corporation itself and to shareholder, never to creditor s. Duty of Loyalty This fiduciary duty can be traced back to the Guth v Loft case in which the state Supreme apostrophize passed that corporate officers and directors are non allowed to use their position of trust and confidence to further their private interests (p.22). ... It is the mode in which a director handles the corporations affairs that will determine whether or not his conduct led to a breach in loyalty duty. The Delaware fiduciary law lays out some of the situations in which duty of loyalty may be implicated. Thee include contracts betwixt the comp both and directors or different corporations in which the director may have some material interest, dealings between a foster company and a subsidiary, management buy outs, corporate reorganizations or acquisitions which may result in differing interests between the majority and minority stakeholders, insider trading, taking over corporate opportunities and competition by the directors with the company. If directors fail to act when approach with a known duty, they can be charged with violating duty of loyalty (p.24). Duty of Care Directors in corporations are obligated by Delaware law to seek ample information before making any business decision. They are also required to act with the requisite care in making much(prenominal) decisions (p.32). Although the directors are requires to act with utmost diligence and highest level of due care, they are not obligated to memorize or to know each and every particular of a contract or any related legal documents. They only need considerable information about a particular situation so as not to make any careless decisions. If the directors are found to have made a decision out of gross negligence, then they can be charged in court for a breach in the duty of care. In order to act diligently, the law in Delaware requires that directors should regularly visit board meetings. They are also required to take their time to review, understand and evaluate all i nformation that they have at their disposal and they should ensure