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directors owe duties to the corporation, [1] and not to individual shareholders, [2] employees or creditors outside exceptional circumstances; directors' core duty is to remain loyal to the company, and avoid conflicts of interest; directors are expected to display a high standard of care, skill or diligence
In order for such a duty to exist, the injury to the claimant must be "reasonably foreseeable", [4] meaning, for example, that the type of employment must be one in which an unfit employee could cause harm of the type which occurred, [3] and the claimant is the type of person to whom such harm would be a "reasonably foreseeable consequence".
Chancellor Allen noted that most company decisions do not need director supervision. "Legally, the board itself will be required only to authorize the most significant corporate acts or transactions: mergers, changes in capital structure, fundamental changes in business, appointment and compensation of the CEO, etc." [2] He pointed to Graham v.
The other aspects of fiduciary duty are a director's duty of loyalty and (possibly) duty of good faith. Put simply, a director owes a duty to exercise good business judgment and to use ordinary care and prudence in the operation of the business. They must discharge their actions in good faith and in the best interest of the corporation ...
Depending upon the size of an organization or a company, the number of directors can vary. Start-up companies can have a single director, which is the minimum for a private limited company according to the law. However, as organizations and businesses expand, the number of directors can increase because more tasks and responsibilities become ...
Directors and officers liability insurance (also written directors' and officers' liability insurance; [1] often called D&O) is liability insurance payable to the directors and officers of a company, or to the organization itself, as indemnification (reimbursement) for losses or advancement of defense costs in the event an insured suffers such a loss as a result of a legal action brought for ...
A further, though technically different, equitable remedy is that according to the US Supreme Court in Taylor v Standard Gas Co [55] corporate insiders (e.g. directors or major shareholders) who are also creditors of a company are subordinated to other creditors when the company goes bankrupt if the company is inadequately capitalized for the ...
The Victoria Park Company is an incorporated body, and the conduct with which the Defendants are charged in this suit is an injury not to the Plaintiffs exclusively; it is an injury to the whole corporation by individuals whom the corporation entrusted with powers to be exercised only for the good of the corporation.