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The Governance Revolution by Deborah Midanek

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Chapter 29 Address Individual Hazards and Personal Fear

We have beaten to a pulp the notion that directors are fiduciaries for the corporation. Black’s Law Dictionary defines “fiduciary relationship” as “a relationship in which one person is under a duty to act for the benefit of another on matters within the scope of the relationship. Fiduciary relationships . . . require an unusually high degree of care.” In exercising their powers to act on behalf of the corporation, directors are bound by two important duties:

The duty of care. “Directors are not merely bound to be honest; they must also be diligent and careful in performing the duties they have undertaken.”

The duty of loyalty. “An undivided and unselfish loyalty to the corporation demands ...

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