Punam was the director of a broadly held corporation that made educational software. Without the knowledge or consent of the board of directors, Punam started a competing business that she ran from home. Which of the following is true?

Question

Quizplus · Accepted Answer

As a director, Punam owed a fiduciary duty to the corporation, which includes a duty of loyalty. By starting a competing business without the knowledge or consent of the board, Punam breached this duty of loyalty. Therefore, option D is the correct choice. Option A is partially correct, as Punam cannot use confidential documents, but it does not fully address the fiduciary duty issue. Option B is incorrect, as directors owe a fiduciary duty to the corporation. Option C is also correct, as the shareholders could potentially sue Punam for any losses they suffer due to her breach of fiduciary duty. Option E is not fully correct, as even if there is no written contract prohibiting competition, Punam still owes a fiduciary duty to the corporation.

Punam Was the Director of a Broadly Held Corporation That