A Cleveland Business Lawyer Explains What May Constitute a Breach of Fiduciary Duty
In a business context, directors and officers of a corporation have what's called a fiduciary duty to protect the interest of their investors or shareholders. A Cleveland business lawyer can explain what this duty requires, and how to prove a breach if you feel you've been harmed.
A Cleveland Business Attorney Explains the Fiduciary Relationship
A fiduciary relationship is based on basic agency law. When one person or entity, called the agent, holds a position of trust over another, the principal, the agent must, at all times, act for the benefit of the principal. This principal/agent relationship can arise in a variety of contexts, business and otherwise. For example, in a corporation, the directors and officers act as agents for the investors/shareholders. What this means is that the directors and officers must act to protect the interests of the shareholder. In general, the directors have the following duties:
- Duty of care;
- Duty of loyalty; and
- Duty of accountability and disclosure.
Directors of a corporation must prudently invest shareholder's money. They are prohibited from commingling corporate funds with their personal funds. They must provide regular accountings to their shareholders, etc.
If you suspect directors or officers of a company in which you hold shares of having breached any of those duties, a business lawyer can review your case and discuss what you can do about it.
Other Situations Where a Fiduciary Duty May Arise
The corporate setting is one of the most common arenas where you'll find the existence of a fiduciary duty. There are others. For example, in estate matters, the executor or personal representative also has the same fiduciary duties to beneficiaries of the will. Lawyer/client relationships also give rise to fiduciary duties. Specific remedies may exist to protect you if you fall victim to mismanagement of your funds or assets in this context. Let a Cleveland business attorney counsel you.
To set up a consultation with an experienced Cleveland business lawyer, contact the Law Office of Shapero & Green. Call 216-831-5100.