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What are the Fiduciary Duties Owed by Officers and Directors? 

May 29, 2024 | Business of Law, Corporate

In a corporation, the corporate officers and directors owe many fiduciary duties to the shareholders and the company. This means they legally have to act in the best interests of the company. Among the primary fiduciary duties owed by officers and directors are the duties of good faith, loyalty, care, and disclosure. If a party who owes a fiduciary duty fails to meet their legal obligations, they may be held in breach — and be held personally liable for monetary damages.   

The Duty of Good Faith

Corporate officers and directors have a duty to act in good faith toward the company — and they must not act in a way that puts their own interests above those of the company. Under the duty of good faith, officers and directors must act with honesty and fairness when handling their obligations to the corporation until their relationship with it terminates.  

The Duty of Loyalty

Corporate officers and directors owe a fiduciary duty of loyalty to the company and its shareholders. Ultimately, this duty means that a director or officer must place the interests of the company above their own personal interests. Examples of a breach of the fiduciary duty of loyalty can include:

  • Self-dealing
  • Usurping a corporate opportunity
  • Misappropriating corporate assets
  • Competing with the corporation
  • Acting with a conflict of interest

If a corporate officer or director learns about a lucrative opportunity being offered to the corporation, they may not secretly take advantage of it for their own financial gain. In some cases, these transactions may be allowed if full disclosure is made to the company and approval is given. Situations involving self-dealing may also be cured after the transaction has been completed through ratification by disinterested shareholders.   

The Duty of Care 

The fiduciary duty of care requires that a corporate officer or director make decisions prudently. They must exercise informed business judgment and act as a reasonable person in similar circumstances would. A director or officer can be held personally liable if they fail to exercise reasonable care under the circumstances. But while an officer or director is expected to use due diligence when acting on the company’s behalf, the business judgment rule protects them from liability if good faith was exercised in making a decision that harmed corporate interests.    

Under New York law, a corporation can limit the personal liability of directors and officers for breaching the duty of care — or even eliminate the duty. However, the duties of loyalty and good faith cannot be waived.  

The Duty of Disclosure

The fiduciary duty of disclosure requires a corporate officer or director to act with complete candor. This means revealing any relevant information that could affect corporate decision-making. A fiduciary must also reveal any matters to the board in which they have a conflict of interest, such as those involving personal investments or other business ventures. 

Contact an Experienced New York Business Attorney

If you’re facing a breach of fiduciary duty claim, it’s critical to have a knowledgeable business attorney by your side. The New York business attorneys at Brinen & Associates are committed to providing dependable representation to corporations, shareholders, officers, and directors for a wide array of business matters, including those involving fiduciary duties. Call (212) 330-8151 or send us a message to learn more about how we can help.  


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I formerly worked as a satellite employee from my home state of New Jersey. I ended my employment with my former employer in 2016. In 2018, I was sued by my former employer for $1.1 million in Illinois State Court. I was referred to Brinen & Associates, LLC by a friend who is a client of the firm. Brinen & Associates, LLC came highly recommended. I contacted Joshua Brinen and then had a consultation at his office with his colleague Mark White. Together, Messrs. Brinen and White explained my options...

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