What is the zone of insolvency?

When a corporation approaches insolvency (the “zone of insolvency”), its fiduciary duties do not change. When a corporation becomes insolvent, however, the duties and responsibilities of directors to the corporation include all residual stakeholder-claimants.

Do directors owe duties to creditors?

Directors and officers of an insolvent company owe fiduciary duties to the company’s general body of creditors. They therefore risk being in breach of these duties if they carry on the business of the company without due regard for the creditors’ collective interests.

Does Delaware allow the elimination of the fiduciary duty of care?

The Delaware General Corporation Law (DGCL) allows corporations to exculpate directors for breaches of the duty of care, but not for breaches of the duty of loyalty (DGCL § 102(b)(7)). To ensure elimination of both traditional fiduciary duties, the wording of the agreement must be unambiguous.

Is fiduciary duty a law?

A fiduciary duty exists in law when a person or entity places trust, confidence, and reliance on another to exercise discretion or expertise in acting on behalf of the client. The fiduciary must knowingly accept that trust and confidence.

When can directors be held personally liable?

Exceptions to the Limited Liability Rule In a few situations, people involved with a nonprofit corporation can be held personally liable for its debts. A director or officer of a nonprofit corporation can be held personally liable if he or she: personally and directly injures someone.

Who do liquidators owe duties?

The Liquidator is under a positive duty to settle a list of contributories for the purpose of ascertaining who may be liable to contribute to the assets of the company on a winding up: section 79 of the Act. This duty is consistent with his duty to get in the assets of the company.

What are the fiduciary duties in Delaware?

Directors of Delaware corporations are subject to the fiduciary duties of care and loyalty (which include the subsidiary duties of good faith, oversight and disclosure).

• Duty of care. Care requires informed, deliberative decision-making based on all material information reasonably available.
• Duty of loyalty.

Do members of Delaware LLC owe fiduciary duty?

Effective August 1, 2013, the Delaware General Assembly has amended Section 18-1104 of the Delaware Limited Liability Company Act to provide that, unless the limited liability company agreement says otherwise, the managers and controlling members of a limited liability company owe fiduciary duties of care and loyalty …

Is Charles Schwab a fiduciary?

As an investment advisory firm and a fiduciary, we can begin managing your Charles Schwab accounts on your behalf, but you will retain control of the accounts and any big decisions that need to be made.