Board of Directors: Duty of Care and Duty of Loyalty

▤ Summary

Jim also has a lot of experience as an angel investor and a board member for startup companies. The business judgment doctrine is essentially a concept in business law that outlines the notion that a court won’t review the actions of a corporation’s board of directors in managing the corporation unless someone suggests that the directors 1) violated their duty of care or their duty of loyalty or 2) made an irrational decision. Implied in this are standards of conduct that, having been broadly explored in many courts, are generally well understood (although this doesn’t prevent endless shareholder lawsuits around directors responsibility, especially in situations where a public company fails and there is a meaningful director & office insurance policy in place.) Taking a board set without being familiar with these fundamentals is sort of like performing a laproscopic gall-blader removal procedure after two years of medical school – you might be able to get through it, but it won’t be pretty, and the patient will probably be miserable. While the fundamental risk dynamics – especially today with the legal and regulatory overhand of Sarbanes Oxley – differ between public and private companies, the responsibilities are the same.

▦ Linked Companies

Oxlo

$1M to $5M