
Contents
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I Introduction I Introduction
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II The Duty of Care II The Duty of Care
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III The Business Judgment Rule III The Business Judgment Rule
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IV Director and Officer Exculpation Statutes IV Director and Officer Exculpation Statutes
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V “Discretionaries”—Not Fiduciaries V “Discretionaries”—Not Fiduciaries
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3 The Illusion of Corporate Director and Officer Fiduciary Duty: The Duty of Care, the Business Judgment Rule, and Exculpation Statutes
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Published:April 2025
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Abstract
This chapter focuses on directors’ and officers’ liability exposure where the duty of loyalty is not implicated. As the chapter addresses, directors and officers are rarely held liable for breach of the duty of care in either direct or derivative actions brought by shareholders. To provide ample support for this statement, the chapter examines case and statutory law with respect to the duty of care, the business judgment rule, and director and officer exculpation statutes. The analysis evidences that monetary liability based on breach of the duty of care by a director or officer requires proof of gross negligence or greater culpability. Accordingly, corporate directors and officers are not fiduciaries. Rather, they are “discretionaries.”
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