Directors Fiduciary Responsibility

A corporation's board of directors has a fiduciary responsibility to the shareholders or investors of the corporation. A fiduciary responsibility inherently carries a duty to act prudently and with due care for the benefit of the corporation. This fiduciary responsibility includes the duty to avoid conflicts of interest, to act solely in the interest of the corporation and its shareholders, rather than in one's own interest, to ensure that the corporation's activities comply with the law in all respects, and to make decisions to safeguard corporate assets and shareholders' investments. While a board of directors does not typically run the daily operations of a corporation, the board is responsible for making major business decisions that may affect corporate assets and worth, and providing general oversight of the activities of corporate officers. A board of directors is also charged with setting policy for the corporation, establishing and supporting the overall mission of the corporation, and assuring that all corporate actions further that mission.

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  • 9% of the companies in the S&P 500 index were named in securities class action lawsuits in 2008.

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    Fiduciary duties are created when a legal relationship between two or more parties is formed....
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