Fiduciary Duties Flashcards
What duties do members and managers of an LLC owe?
(1) duty of care
(2) duty of loyalty
(3) duty of good faith
What is the duty of loyalty for managers and members of an LLC?
(1) Must account and hold in trust for the LLC any benefit derived by them in conducting LLC business
(2) Must not conduct business adverse to the LLC’s business
(3) Must not compete with the LLC
What is the duty of care subject to?
Business judgment rule
What is the duty of care?
Fiduciary must act with the care that a person in like position would reasonably believe appropriate under similar circumstances
Upon whom may a director or officer reasonably rely?
(1) Individual the director or officer has delegated to perform one of her functions
(2) Information prepared by a professional employed by the corporation
(3) Employee the director or officer believes to be reliable
(4) Legal counsel, an accountant, or other individual who advises the corporation on various matters
What is the business judgment rule?
Rebuttable presumption that immunizes directors and officers from liability if there is a reasonable basis from which to conclude that the decision was made in good faith and with due care
What type of conduct violates the duty of loyalty?
(1) Self-dealing
(2) Usurping corporate opportunity
(3) Competing with the corporation
(4) Failure to disclose material facts