Can a San Diego shareholder in a corporation file suit against a corporate director or the corporation’s Board of Directors to hold them accountable for bad decisions? This is a complex area of law, and every case is truly unique. Generally speaking, directors in California are protected by several legal statutes that limit their liability. However, directors are held to high standards when it comes to the fulfillment of their fiduciary duties: the Duty of Care and the Duty of Loyalty.
The Duty of Care basically says that Directors must act in a “deliberate and informed” manner and use all available information and materials when making corporate decisions. The standard applied by California’s Courts is often referred to as the “business judgment rule.” Would a reasonable person come to the same conclusions? In effect, a California director cannot be sued for a bad business decision that any reasonable business professional would have made. However, it may be appropriate to challenge decisions based upon negligence or the failure to act in good faith.
The Duty of Loyalty holds the Director to a responsibility of protecting the interests of the corporation and its shareholders, and put the needs of the corporations above their own self interests. Abuse of their position to achieve “sweetheart deals” or to conduct transactions or influence decisions that bring profit to the Director at the expense of the corporation is a violation of the Duty of Loyalty. Conflict of interest cases are quite complex and it is important to work with experienced and seasoned San Diego corporate attorneys.
At the Watkins Firm, we have decades of experience in corporate matters and associated litigation. We have filed several successful derivative lawsuits on behalf of corporate shareholders who wish to protect the corporation from actions of its owners, officers or directors. You can file suit against a corporate director. If you are concerned about the behavior, decisions or actions of a corporate Director in California we invite you to review the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
