Frequently Asked Questions
How does the duty of care apply to the fiduciary responsibilities of an institution's board members?
The duty of care is a crucial aspect of the fiduciary responsibilities of an institution's board members. It requires these individuals to execute their roles with the diligence, care, and skill that an ordinarily prudent person would exhibit in a similar situation. This duty is applicable to board members in various institutions, including educational institutions, corporations, and non-profit organizations. In an educational institution, the duty of care is part of the fiduciary responsibility that mandates board members to make decisions in good faith, prioritizing the institution's best interests and aligning them with its charitable or public mission. This duty must be exercised independently, free from undue influence by any person or financial interests. Similarly, in a corporation, the board of directors, who are the governing body, also have a fiduciary duty to exercise due care in managing the corporation's affairs. This duty requires them to conduct themselves in a manner that they believe is in the best interest of the business, mirroring the behavior of an ordinarily prudent person.
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