The focus of this Blog Article will be Self-Dealing and Breach of Fiduciary Duties in this scenario. However, it is important to note that that Self-Dealing is just one way a breach of fiduciary duty can occur.
There are numerous situations where breach of fiduciary duties can arise. There are also many types of fiduciary duties, which can arise. Some of the most commonly breached fiduciary duties are as follows:
• Self Dealing
• Misappropriation of Funds
• Neglect of Fiduciary Duty
• Usurping Business Opportunities for Personal Gain
• Abuse of Power
• Shareholder Oppression
• Shareholder Squeeze Out
• Shareholder Freeze Out
• Conversion of Funds
• Failure to Act When Fiduciary Duty Imposes Such A Requirement
There are also a number of relationships that give rise to fiduciary duties. Some are as follows:
• Directors and Officers in Corporations
• Partners in Business
• Real Estate Brokers
• Real Estate Agents
• Financial Advisors
• Financial Brokers
• Executors of Estates
• Trustees of Trusts
• Administrators of Estates
• Personal Representatives of Estates
• Guardianships of Wards
• Conservatorshops of Wards
• Powers of Attorney
• Health Care Situations
These different types of breaches of fiduciary duties will be addressed throughout this Atlanta Business Lawyer Blog over the course of time. However, for the purpose of this Blog Article, we will concentrate on one of the most frequently breached fiduciary duties, the classic case of “Self Dealing“.
Self-dealing is often occurs between officers and directors of Georgia corporations have a fiduciary duty of care and loyalty to the shareholders of those organizations. As such, under Georgia law they are obligated to act in good faith and in the corporation’s best interests. When officers or directors put their own personal interests above those of the corporation and shareholders (i.e. by using corporate assets for their own benefit), this is considered self-dealing. Issues such as self-dealing are a growing issue and occurrence in corporations. The Atlanta Fiduciary Law Attorneys in my Atlanta, Georgia Business Firm have represented numerous clients who have made with claims concerning self-dealing against the “higher-ups” and/or other “shareholders” in the corporation.
When this type of allegation is brought forward, the plaintiff must provide proof that the officer or director derived personal benefit from the transaction. If this is shown, then the officer or director must defend their actions by demonstrating that the transaction was for the benefit of the Georgia Corporation, and any perceived self-dealing was just happenstance and circumstantial. Even when the director or officer does prove that the action was favorable to the corporation, and ultimately the shareholders, it still may be considered a breach of fiduciary duty.
Self-dealing and other breaches of fiduciary duty can financially destroy a corporation. Thus, it is essential to have an operating agreement that clearly defines the obligations of all members and interested parties to a corporation. An experienced Atlanta, Georgia Fiduciary Law Attorney can put a stop to the self-dealing and adequately assist in imposing remedies in equity and at law upon the self-dealing party. Nevertheless, to dispense with arguments that self-dealing did or did not occur; it is wise to have an Georgia operating agreement that defines the responsibilities among members of the company, both for shareholders, directors and officers, and employees. A comprehensive operating agreement should be part of the beginning and day to day operation of any corporation.