Practice Question
To whom does the fiduciary duty of a director of a corporation extend?
Answer +
C
Step-by-step solutions +
The fiduciary duty of a director is a legal obligation to act in good faith and in the best interests of the corporation as a whole.
This means directors must prioritize the corporation’s long-term success and overall health over the interests of any individual stakeholder or group (e.g., specific shareholders).
While directors must consider shareholder interests, their duty is ultimately owed to the corporation itself as a legal entity.
This principle promotes stability, ethical management, and sustainable decision-making.
Final Answer: C – The corporation
This means directors must prioritize the corporation’s long-term success and overall health over the interests of any individual stakeholder or group (e.g., specific shareholders).
While directors must consider shareholder interests, their duty is ultimately owed to the corporation itself as a legal entity.
This principle promotes stability, ethical management, and sustainable decision-making.
Final Answer: C – The corporation