Acting in the Best Interests of Another
A fiduciary is a person who acts on the behalf of others because of the fiduciary’s special knowledge or skills. Fiduciarieshave a duty to act in the best interests of those whom they represent. Corporate officers and board members are fiduciaries because they control the day-to-day operations and the overall management of a corporation on behalf of the owners of the corporation: the shareholders. Even though the roles that officers and board members play in the corporation differ, the fiduciary duties each have are the same.
Duties of Board Members and Officers
Board members are responsible for establishing the corporation’s mission and vision, then overseeing the corporation to ensure that it acts consistently with the mission. The board does not handle day-to-day business operations. Boards of directors delegate the day-to-day management of corporations to officers such as the chief executive officer, chief financial officer and chief organizational officer.
The board and officers’ fiduciary duties include these duties:
- The duty of care
- The duty of loyalty
Some of the ways that the board and officers carry out these duties include:
- Acting in good faith
- Providing full disclosure
- Dealing fairly with the company
- Avoiding conflicts of interest
- Acting with loyalty to the company in all business transactions
Talk to a Lawyer
Corporate officers and board members enjoy great prestige with their positions. Along with such esteem comes the obligation to act with the highest sense of integrity, as the events at Best Buy demonstrate. When corporate officers and board members fail to meet this duty, the shareholders may need to litigate. If you believe a corporation’s board or officers have failed to meet their fiduciary duties, contact a seasoned business attorney who can discuss the situation with you.