Fiduciary Duty: Valuation Of Johnny's Company Television Inc.

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Fiduciary Duty Douglas Tolliver Grantham University Fiduciary Duty A fiduciary is a person with a duty to act primarily for another’s benefit. In a corporation, the directors and officers of the company serve as the fiduciaries. Their fiduciary duties include the duty of loyalty and the duty of care. In the scenario, the shareholder is well within their rights to sue Jimmy, the CEO of News Corp, for violating his fiduciary duty obligation of loyalty to the corporation. The fiduciary duty of loyalty requires that corporate officers and directors place their personal interests second to the welfare of the corporation. Jimmy conspired with Johnny to over inflate the valuation of Johnny’s company Television Inc. Next, Jimmy proposed to the Board of Directors to purchase Television Inc for $500 million when he knew it was only worth $2 million. These acts illustrate how Jimmy’s decisions were driven by his personal interests versus the interests of the corporation. In most instances, courts would consider the “business judgement rule” when making a ruling. The Business Judgement Rule relieves corporate management from liability for actions that are undertaken in good faith. When management or directors make honest, informed …show more content…

With duty of care, directors are obligated to be honest and to use prudent business judgement in the conduct of corporate affairs. They must use the same degree of care in their business decisions as they would with their personal ones. In the scenario, the Board of Directors closely examined the proposed transaction but they were unable to discover the gross inflation of Television Inc because of Jimmy’s forgeries. The directors executed their responsibility to the best of their ability and they should not be held liable. The shareholder should not have a case against the directors for violating their fiduciary duty of

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