Duties of Corporate Directors & Officers

If you started a Virginia or North Carolina corporation or limited liability company (LLC), joined a corporate board of directors, or took a position as CEO, you are in a unique position of authority and influence in your company. Virginia and North Carolina law imposes certain duties on directors and officers of corporations and LLC’s – these are the duty of loyalty and the duty of care.

The duty of care requires that a corporate director or officer engage in business on behalf of the corporation in good faith. Decisions made by a director/officer are generally subject to the “Business Judgment Rule”, meaning that a court will generally assume that a director or officer made a decision in good faith, absent some clear evidence of fraud or bad faith.

The duty of loyalty requires that a director/officer act in a manner that he or she believes is in the best interest of the corporation. This includes the requirement that a director/officer refrain from self-dealing or competing with the business.

As another measure toward transparency, Virginia & North Carolina law permits shareholders of a corporation or members of a limited liability company to inspect certain records of the company. 

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