When are the Directors of a Company liable?

Generally, not often. The business judgment rule generally prevents a court from holding a corporation’s directors liable for making a bad business decision. This rule evolved from common law, and in Florida, it is codified under Florida Statute §607.0830 and §607.0831.

This statute provides that a director must complete his duties in good faith, with ordinary care, and in a manner he believes to be in the best interest of the corporation. However, breaching one of these duties does not make a director instantly liable for monetary damages. In addition, the plaintiff must also prove the director’s breach consists of one of the following: (1) a knowing criminal violation; (2) a transaction involving an “improper personal benefit;” (3) an improper distribution to shareholders; (4) conscious disregard for the best interest of the corporation; or (5) willful misconduct.

The courts have given directors wide discretion to make business decisions and generally are reluctant to substitute the director’s judgment for that of their own.

If you are a shareholder or director in Miami-Dade, Broward, Monroe, Collier or Lee County Florida, schedule a consultation with the experienced attorneys at EPGDLaw today, located in beautiful Coral Gables. Call us at (786) 837-6787 or e-mail us to determine whether you have a claim or whether the business judgment rule applies as a legal defense.

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EPGD Business Law is located in beautiful Coral Gables, West Palm Beach and historic Washington D.C. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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