Frequently Asked Questions

In what ways can a director breach his or her fiduciary duty?

A director can breach his or her fiduciary duty in several ways, primarily by failing to uphold the duties of care, loyalty, and obedience. These duties are fundamental to the role of a director in any institution, whether it's an educational institution, a corporation, or a non-profit organization. In terms of the duty of care, a director may breach this duty by failing to perform their responsibilities with the diligence, care, and skill expected of an ordinarily prudent person in a similar position. This could include acts of mismanagement or a failure to act, which could lead to losses for the corporation, its shareholders, or creditors. The duty of loyalty requires directors to act in good faith and put the interests of the institution before their personal interests or those of another person or organization. A breach of this duty could occur if a director acts out of greed or convenience, rather than in the best interests of the institution. Lastly, the duty of obedience mandates that directors ensure the institution is operating in a manner that furthers its stated purpose and complies with all statutes and regulations. A breach of this duty could occur if a director fails to ensure the institution is operating in compliance with these requirements.