Duties of Care and Loyalty

Question 1

Duty of care

Answer 1

Directors, officers, and incorporators must perform duties: in good faith, reasonably in best interest of corporation, with care of person in like position

Question 2

Business Judgment rule

Answer 2

Shields directors from liability and insulates board decisions from review. Rebuttable presumption that directors make informed decisions in good faith. May rely on information appropriately provided to him

Question 3

Duty of loyalty

Answer 3

May arise where individual: has business dealings with corp (self-dealing), takes advantage of a corp opportunity, enters into competition with the corp

Question 4

Business dealings with corp

Answer 4

conflict of interest is inherent where director has personal interest in transaction with corporation for goods or services

Question 5

Corporate opportunity

Answer 5

Directors prohibited from taking business opportunity from corp for own benefit, unless: corp chose not to take opportunity after full disclosure or corp could not have taken opportunity

Question 6

Competition with corp

Answer 6

Directors may engage in independent business if acting in good faith, but if competing with corp, limitations may apply