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Obligations of Directors & Officers


Essentially, Directors & Officers are considered to have a duty of care, whereby they follow the “prudent person rule”, make informed decisions, perform in good faith, and act in the best interest of the company. They also have a duty of loyalty that includes no furthering of personal interests and refraining from personal action damaging to the corporation. Finally, they have a duty of obedience to perform duties within the corporate charter/by-laws and act in accordance with all laws, statutes and regulations pertaining to their industry.


Breach of any of these obligations can incur personal liability to the individual Director or Officer involved as well as an allocation of blame to the other Directors & Officers on the board, possibly extending to the corporation itself (80% of lawsuits now also name the corporate entity as a defendant.)