The Role of Company Directors Essay Example | Topics and Well Written Essays - 2500 words

The Role of Company Directors - Essay Examplefiducial business is inherent amidst the interaction between directors and their family, trustees and their trusts, and lawyers and their customers. Barnet (2008) has defined fiduciary duty as a assume of c be observed in a legal correlation of faith and assurance involving an individual in a position of control, authority or influence, and another who is reliant on the appropriate exercise of that power...intrinsic in fiduciary duty is the accountability to perform in excellent confidence and honesty, the duty to work in the interests of the principal and to shun self-dealing transactions, and the commitment to not wield unreasonable demands or to proceed without the awareness and mildness of the principal.In a landmark case involving Caremark International Inc.1996 by the Delaware Chancery Court, the role of companys directors was expanded to encompass liability in monitoring the companys operations or supervising liability. This in effect meant that the directors had a fiduciary duty of closely supervising or overseeing the companys daily transaction thus had to keep up-to-date on the regular operations of the corporation. The Delaware dictatorial Courts decision, Stone v. Ritter Del. Supr., Jan. 27, 2009 upheld that the directors failure to act in the face of a known duty to act is a breach of the duty of loyalty.To stem the excesses of the corporations in the US, the Sarbanes-Oxley Act was enacted even as the courts stepped up punitive actions on errant directors and firms engaging in fraudulent activities. As a consequence, many directors are increasingly getting more involved in the companys operations to offset cosmos charged with negligence and abdication of their fiduciary duties (Rehfeld, 2005).