Standards governing actions of corporate directors

The video tutorial explains the duties of care and loyalty for corporate directors. The duty of care requires directors to act as a reasonable person would, ensuring actions are legal, informed, and have a rational business purpose. The duty of loyalty mandates directors to act in the corporation's interest, avoiding self-dealing and not usurping corporate opportunities. Exceptions exist if opportunities are disclosed and declined by the corporation. Overall, directors must act in good faith, adhering to these duties to avoid breaches.

What are the two primary duties of corporate directors?

• Duty of honesty and duty of integrity

• Duty of efficiency and duty of effectiveness

• Duty of transparency and duty of fairness

• Duty of care and duty of loyalty

What does the duty of care require directors to ensure about their actions?

• That they are quick and decisive

• That they are innovative

• That they are legal, well-informed, and have a rational business purpose

• That they are profitable

How is the duty of care similar to the negligence standard?

• It requires directors to act as reasonable individuals

• It requires directors to avoid risks

• It requires directors to act quickly

• It requires directors to maximize profits

What is an example of self-dealing under the duty of loyalty?

• Entering into transactions that benefit the corporation

• Hiring a personal business to provide services to the corporation at excessive compensation

• Disclosing opportunities to the corporation

• Voting on corporate matters

What should a director do if they want to take advantage of a corporate opportunity?

• Keep it secret from the corporation

• Disclose it to the corporation and allow independent members to vote

• Immediately take advantage of it

• Ignore the opportunity