For many years, a trustee has been required to serve their beneficiaries loyally with the same regard for the beneficiary’s interests as they would their own. And a trustee must also surrender any gain to the beneficiary when the trustee has made a profit by serving their own needs while in the service to the beneficiary. This duty of loyalty has been adapted by the courts to other relationships under the title of fiduciary duty. There are many instances of litigation where the member of a corporation is accused of a breach of fiduciary duty when this loyalty has been violated.
Fiduciary Duty in Corporate Disputes Involving Conflicts of Interest
There are many examples of what constitutes a breach of fiduciary duty. These would include conflict of interest transactions involving corporate officers and directors, conflict of interest transactions involving majority or controlling shareholders, and breach of partnership and other juridical entities fiduciary duties. Limited liability companies would come under the third example as their members also owe fiduciary duties to each other.
A corporate officer or director who recommends a transaction to the board leading to monetary gain for themselves without disclosing the possible conflict of interest to the board members and other shareholders can become involved in a corporate dispute with those other shareholders. Majority and controlling shareholders who reap financial and other gains from these types of transactions are also required to inform the other shareholders as well. Not doing so is a violation of their fiduciary duty.
When there seems to be evidence that a member of a board of directors, corporate officer, or majority stockholder has been involved in an action involving a breach of fiduciary duty due to a conflict of interest or any other violation of loyalty; a consultation with an attorney experienced in this kind of corporate dispute must take place.
Whether you are in a closely held corporation, limited liability company, or even a partnership and a conflict of interest involving another person in the organization comes to light; seek the counsel of the corporate dispute attorneys at Rushing & Guice. We have served the business community in the Mississippi Gulf Coast area for many years and have resolved many breach of good faith and fiduciary duty violations to our clients’ relief and satisfaction.