The fiduciary duty of a director to act in the best interests of the corporation means that a director may never do business with the corporation.If directors were to negotiate transactions between themselves and the corporation, there would be in an intolerable conflict between their personal interests and their obligation to act in the best interests of the corporation.That is why such transactions are never permitted.

Question

Quizplus · Accepted Answer

Directors can do business with the corporation if it is approved by the board of directors and if they disclose the potential conflict of interest and recuse themselves from voting on the transaction. However, such transactions are closely scrutinized to ensure that they are fair and reasonable to the corporation.

The Fiduciary Duty of a Director to Act in the Best