Are You An Officer Of A Corporation? Understand Your Fiduciary Duties

As an officer (say a director) of a corporation, you have certain obligations to the corporation. These obligations are your fiduciary duties. Below are some specific examples of fiduciary duties.


The fiduciary duty of obedience obligates you to carry out your duties within the scope of your corporate's rules and regulations. Most businesses have laid down procedures on applicable business practices. For example, your corporation may have rules and regulations on:

  • How much money to spend on corporate social responsibility
  • Avoiding unethical businesses
  • Dealing with local suppliers to support local businesses

You breach your fiduciary duty of obedience if you don't follow these rules and regulations. An example is if your business only deals with local suppliers, but you source products overseas.


The fiduciary duty of disclosure means you must declare all material facts to the corporation so that it can make informed decisions. Full disclosure is especially necessary before major decisions. Say you want to:

  • Open or close a business branch
  • Increase prices
  • Switch suppliers

You breach the fiduciary duty of disclosure if you keep silent and the silence costs the corporation money.


The fiduciary duty of care requires you to exercise due diligence and caution in the cause of your duties. For example, you should:

  • Review major decisions before execution
  • Supervise the staff under you to ensure they are not harming the business
  • Investigate suspicious activities instead of taking them at face value

You won't get into problems if you make an error in judgment despite taking reasonable care in your line of duty. The law recognizes that people cannot be right a hundred percent of the time. However, blatant carelessness that leads to losses for your corporation can get you in trouble. An example is if you failed to attend a crucial meeting and make a decision that goes against the resolutions at the meeting.


The fiduciary duty of loyalty means you must put the needs of the corporation above others — including above your needs. Anything that can benefit the corporation or another entity must go the corporation's way.

Consider an example where your corporation provides financial advice to investors. The fiduciary duty of loyalty means you cannot provide the same services in the area as your employers. Otherwise, you would be in direct competition with your employers, which would violate the fiduciary duty of loyalty.

Things might not go your way all the time in your line of duty. Your employers might accuse you of breaching your fiduciary duties even if that wasn't your intention. Consult a business litigation lawyer if you have any questions.