A breach of fiduciary duty occurs when the fiduciary acts in the interest of themselves, rather than the best interest of the employer or principal. A fiduciary’s actions must be free of conflicts of interest and self-dealing. As a fiduciary, you can’t use the principal for your own personal advantage. In other words, you can’t use corporate property or corporate assets for your own personal gain, nor can you take advantage of a corporate opportunity for your own personal pursuits. Depending on the actions of the fiduciary, fraud may also be an issue, but this is typically a more complex legal matter.

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A breach of fiduciary duty complaint is much easier to prove than fraud as there’s no need to prove fraudulent or criminal intent. To win a breach of fiduciary duty complaint, the claimant only has to prove that you were in a fiduciary position and you breached that duty for your own personal gain.

How to Avoid a Breach of Fiduciary Duty

One way to avoid breaching your fiduciary duties is to ensure that Board Resolutions are created each and every time a major decision is made by the board of directors or shareholders on the company’s behalf. Resolutions can serve as a record of the choices the directors and shareholders have made.

It’s also important to understand the basics of fiduciary duty so that you know what’s to be expected of you, and what actions might be in breach of your duty. Understanding and avoiding prohibited transactions (e.g. those that would benefit you personally or adversely affect the company) will also help you avoid breaching your duties.

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Get started Start Your Board Resolutions Answer a few questions. We'll take care of the rest.