Question

Understand the fiduciary duty of officers(duty of loyalty and duty of care). When an officer is self dealing ..

Answer 1

ANSWER:

MEANING

Basically "Fiduciary" is a Latin word of Trust. A Fiduciary is a person or party who has an responsibility to act with good faith for the best interest of individual. The fiduciary duty of officers includes duty of care and duty of loyalty. Now we can see both duty one by one.

1. Duty of care is a fiduciary responsibility which requires directors to make business decision after collecting all information into account and then act in a judicious manner. They have to take care before taking decision for this officer should have trusted infomation and can utilise expert advice and take independent judgement.

2. Duty of loyalty is a second fiduciary responsibility which requires officers to be completely loyal all time for imposing responsibility to avoid conflicts of interest. They keep corporaticorporation information private and avoid personal interest in transaction taken place between corporation and other party.

By performing their fiduciary duty of officers they should prevent from having self dealing of a corporate opportunity for personal gain and should be careful while taking decision and be loyal for all the transaction.