Four Duties of Directors and Officers

Axis Insurance

Officers and directors of an organization have a fiduciary obligation to carry out their duties according to the corporate documents outlining their authority and areas of corporate interest. When this doesn’t happen, a company and its directors may find themselves facing fiduciary insurance claims from their employees. As Axis Insurance warns, there are four areas where directors and officers are susceptible to claims that reveal their errors.
1. Duty of Obedience. In a non-profit organization, there is an obligation that decisions will be made that comply with the charitable purpose of the company. Violations occur if there is a failure to obey donor restrictions or permitting resources to be used for non-charitable costs.
2. Duty of Loyalty. With this obligation, administrators are expected to put the interest of the corporate of over their own areas of interest. They may not secretly pursue the business deals for their own profit.
3. Duty of Care. Directors are expected to exercise diligence and care when making decisions for the company. They can face liability claims if they fail to act with prudence and reasonable care.
4. Duty of Disclosure. Being transparent with directors, officers, and shareholders is important so they can make informed decisions with assets or resources. They must also disclose conflicts of interests that can interfere with decision making.