A firm's managers owe fiduciary duties.
The fiduciary duty of managers is an obligation to put the firm's interests above their own. These duties are a vital part of every business and should not be ignored by anyone who holds a position within the organization.
Whether your company is running on the profit and loss (P&L) statement or the balance sheet, the decisions you make should be in the best interest of your company. This means that you must look at any new information and assess how it will impact your firm.
You must also avoid any personal gain from a decision made for your company, as this could result in a breach of the fiduciary duty. If you decide to use a business opportunity or investment for yourself, you must disclose it to the board of directors and shareholders.
Another key duty of a fiduciary is loyalty to the corporation, which prevents them from acting for their own personal interests at the expense of the company. For example, a manager who gets an offer from a large corporation for a buyout of the LLC without properly assessing it, may be held liable under this law.
When a corporation becomes insolvent, the officers and directors must still owe fiduciary duties to creditors to ensure that they are paid out as they should be. However, creditors are typically not able to take legal action against corporate officers and directors until they have been damaged by the actions of those individuals.