Glen is a director and shareholder of Eagle Corporation and of Fine Products, In

Question

Glen is a director and shareholder of Eagle Corporation and of Fine Products, Inc. A resolution comes before the Eagle board to compete with Fine Products. What is Glen’s responsibility?

Todd is a director and officer of United Sales, Inc. Todd makes a market­ing decision that results in a dramatic decrease in profits for United and its shareholders. The shareholders accuse Todd of breaching his fiduci­ary duty to the corporation. What is Todd’s best defense against this ac­cu­sation? Later, a resolution comes before the United board to compete with VeriFine Products, Inc. Todd is a director and shareholder of VeriFine. What is Todd’s responsibility in this situation?

Explanation / Answer

Glen,as a director of eagle corporattion, can not support the business of Fine products.A director can not support a business that competes directly with a corporation on the board of which the director sits.The director's fiduciary duty is to fully disclose the conflict of interest.The director in such a case will have to resign from one of the boards.

Todd's best defence against this accusation would be the business judgement rule.As long as the director acts in good faith and does what he considers is necessary for the best interest of the corporation and its shareholders and does it with the same care as an ordinarily prudent person would do in same circumstances,he is not liable simply because a decision had a negative result.

As a director Todd's responsibility is to fully disclose the conflict of interest.He can not support a business that compete directly with acorporation on the board of which he is a director.Todd has to give resign from one of the boards.

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.