Duties of Corporate Directors and Officers
a. For the current and future directors of Fitzgerald’s Foods understand and know their duties to the corporations.
a. Fitzgerald Foods to apply polices to all current and future directors of the company.
3. LEGAL DUTIES OF DIRECTORS AND OFFICERS
a. “Directors and Officers of cooperation are required to use their best judgement when making business decisions as well as act in good faith of the business.” (Corporate Fiduciary Duty to Shareholders).
i. Duty of Care is when the directors and officers use precaution and are attentive when they make decisions about the behavior of their corporations. According to “Corporate Fiduciary Duty to Shareholders,” meeting their duty of care include acting:
1. Good Faith
2. With the care of a reasonable person in like position
3. With reasonable belief, their decisions are in best interest of the corporation
ii. Duty of loyalty is when directors and officers of a corporation have loyalty to the corporation. This means that they put the interests of the corporation above themselves. According to (Corporate Fiduciary Duty to Shareholders), Violations of the duty of loyalty include:
1. Gaining secret profit belonging to the corporation
2. Competing with corporation
3. Seizing corporate opportunity
4. Self-dealing with corporation
iii. Duty of Good faith is implicated as “conscious disregard” or “intentional dereliction of duty.” (Corporate Fiduciary Duty to Shareholders).
4. BENEFITS OF COMPLIANCE
a. There are many benefits to compliance for the Fitzgerald Foods Corporation. Quality improvements will help prevent Fitzgerald Foods from errors or failures. Having quality improvements will result in fewer repeat tasks for the company. Having greater efficiency will allow improvements as well. This will improve returns for stakeholders and the more that efficiency in embedded in the business the more efficient tasks become. “Having a high rate of trust and brand loyalty will help your stakeholders know that compliance is one of the company’s primary concerns. Doing so will show that your company commits to doing business in the highest ethical way.” (Business Benefits of Effective Compliance Programs).
5. CONSEQUENCES OF NONCOMPLIANCE
a. Legal Consequences for the Company
i. There are many consequences of noncompliance for Fitzgerald Foods Corporation. Such impacts can include lawsuits not only against the corporation itself but the directors and officers that violate the laws.
b. Legal/Employment Consequences for Director/Officer for Violating the Policy
i. If a director or officer violates a legal duty owed to the company by using unethical activity is an example of violating policy. An excellent example of this would be a manager discriminating against potential employees based off their gender, age, race or religion. Another example would be if a director and or officer were taking supplies from the company such as food and or office supplies. Both examples are violations of a legal duty that the director and officer owed to the company. In the past year, three directors were forced to leave Fitzgerald foods after it was discovered the directors breached their legal duties to the corporation, with two of the directors being officers of the corporation.
c. Real world example of a director/officer’s liability for noncompliance
According to Directors and Officers Claim Examples Against Non-Profits “The Board of Directors of a church was sued by several their donors, alleging misrepresentation of the financial status of the organization. Three members brought separate suits for repayment of the money lent to the church. The first case settled for $240,000 of which $117,000 accounted for expense. The second case settled for $75,000 and incurred $86,000 in defense costs. The last case paid nothing to the claimant but incurred $13,000 in defense costs. The total loss including defense costs exceeded $530,000.”
a. How a director/officer’s unethical behavior can lead to liability.
i. One example of how a director/officer unethical behavior can lead to liability will be if a director and or officer ask an employee to perform a job that he or she is not trained to do. If this employee, then has issues performing this job or potential accident this results in unethical behavior. With this then the company can be liable for any damages done to the employee as well as the facility.
Chairman I do believe that there are a few business risk management procedures that Fitzgerald
Foods can adopt soon to help avoid violations of legal duties by its directors and
Officers. Creating a risk management plan will help Fitzgerald Foods recognize risks and
Develop tactics to manage these risks. First your directors need to know how to identify the risks
That may have an effect of your project. Next the directors need to analyze the consequences of
These risks and evaluate them as to if the risk is satisfactory or needs to be treated. The directors
Then need to treat the highest risks first until they are in an acceptable range. Lastly the directors
Need to be able to review and monitor the risks. In doing so this will allow the directors to be
prepared and can effectively achieve the goals for Fitzgerald Foods.
Firm, P. F. (n.d.). Corporate Fiduciary Duty to Shareholders. Retrieved from http://www.shareholderoppression.com/fiduciary-duty-to-shareholders
Corporate Responsibility: The Board of Directors’ Duty of Oversight Part I – Defining the Duty. (n.d.). Retrieved from http://www.haynesboone.com/publications/corporate-responsibility-the-board-of-directors-duty-of-oversight-part-i–defining-the-duty
Posted by Administrator on Jan 06, 2017. (2016, December 25). Business Benefits of Effective Compliance Programs. Retrieved from https://www.ethicaladvocate.com/business-benefits-effective-compliance-programs/
Posted on Wed, Jun 23, 2010. (n.d.). 9 Directors and Officers Claim Examples Against Non Profits. Retrieved from http://www.rollinsinsurance.com/nonprofitguard/9-directors-and-officers-claim-examples-against-non-profits/