Which statement best describes a director’s fiduciary duty to a company?
Correct answer: A. The director must act honestly in the company’s interests
- A. The director must act honestly in the company’s interests
- B. The director may use company property for private benefit
- C. The director must guarantee every company debt personally
- D. The director may ignore the company’s constitution when convenient
Explanation
A fiduciary duty requires a director to act in good faith for the benefit of the company and to avoid improper personal advantage. It does not normally make the director personally liable for every company debt.
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About Company Law Basics
Company law covers incorporation, separate legal personality, limited liability, shares, the memorandum and articles of association, and the powers and duties of directors. It also includes shareholder meetings, resolutions, company records, audit, winding up and the differences between a registered company, partnership and sole proprietorship.
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