Basic Duties

Directors and officers are subject to three basic duties in performing their responsibilities:

1. Duty of Diligence. Directors and officers must act with the care that a reasonably prudent person in a similar position would use under similar circumstances. They must perform their duties in good faith and in a manner they reasonably believe to be in the best interests of the corporation.

2. Duty of Loyalty. Directors and officers are required to refrain from engaging in personal activities, which would injure or take advantage of the corporation. They are prohibited from using their position of trust and confidence to further their private interests. This duty requires an undivided and unselfish loyalty to the corporation and demands that there be no conflict between one’s corporate duty and self-interest.

3. Duty of Obedience. Directors and officers are required to perform their duties according to the statutes and the terms of the corporate charter. Directors may be liable if they authorize an act which is beyond the powers conferred upon a corporation by its charter or by the laws of the state of incorporation.