Corporations: Duties of Directors and officers

Question 1

Statutory liability of directors

Answer 1

where a director is jointly and severally liable for violating statutory requirements, any other director also present when the action was taken is assumed to have agreed to the action unless his disagreement is recorded in writing

Question 2

Fiduciary duty of care

Answer 2

directors owe a duty of care to the corporation. A director shall perform his duties in good faith and with the degree of care that an ordinarily prudent person in a like position would use under similar situation.

Question 3

Business judgment rule

Answer 3

the BJR is a rebuttable presumption that directors are better equipped than courts to make business decisions. Directors must be (1) disinterested; (2) reasonably diligent; (3) acting in good faith. IF these conditions aren’t met, personally liability may attach. Acts that are illegal or negligent/wasteful are examples.

Question 4

Buty of loyalty

Answer 4

directors and officers owe a duty of loyalty to the corporation to not put personal interests ahead of corporate interests.

Question 5

Corporate opportunities

Answer 5

a director cannot exploit information or opportunities acquired as a consequence of his corporate position for personal gain, unless there is full disclosure or the corp is clearly unable to take the opportunity

Question 6

A corporate opportunity exists where . . .

Answer 6

(1) opp falls within the company’s line of business
(2) surrounding circumstances seem unfair to corp,
(3) corp would have been interested in taking, and
(4) corp has resolved to acquire the opportunity