Overview of Corporate Self-Dealing

Business is a game of gambling. In poker, a person can be honest and keep his or her hands above the table, but there is always a person that has hands under the table. Businesses find many people with hands under the table when the issue of corporate self- dealing appears. Corporate self-dealing is when a trustee or other fiduciary of a business takes advantage of his or her position in a transaction for self-benefit instead of the company’s overall benefit. Self-dealing can include corporate assets or opportunities. John H. Farrar and Susan Watson notes, “If a director deals with a company that he or she is a director, there is a risk of conflict of interest as well as a breach of the duty to act bona fid for the good of the company or promote success” (495). Without some form of limitations businesses have no way to control the act of self-dealing within the company. Although numerous solutions have been suggested, the solution implemented needs to be able to form to each individual business without limiting the transactions of the business. Nonintervention, Prohibition, and Majority of the Minority Vote have all been considered, however, these solutions are not efficient enough for the business world or able to best limit the role of self-dealing. Nonintervention only ignores the problem in hopes it can resolve itself, while Prohibition provides only a strict method that does not ensure that people will not perform the actions. The Majority of the Minority vote resembles a voting system, but is not time efficient. While it only guarantees that the transaction is fair, the best solution to limit corporate self-dealing is to incorporate the Fairness test into business transactions.

Various solutions have been implemented to ...

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...ibition creates a strict environment and does not stop illegal dealing. Finally, the Majority of the Minority Vote fails because it is based solely on a voting system that is liable to biased based on a group preference vote. The Fairness Test ensures that the transaction will be upheld in a fair manner, which helps limit major acts of self-dealing. Life is not fair, but there are ways of making it fair.

Works Cited

Farrar, John H., and Susan Watson. "Self-Dealing, Fair Dealing And Related Party Transactions--History, Policy And Reform." Journal of Corporate Law Studies 11.2 (2011): n. pag. EBSCO. Web. 21 Oct. 2013.

Goshen, Zohar. "The Efficiency of Controlling Corporate Self-Dealing: Theory Meets Reality." California Law Review 91.2 (2003): n. pag. JSTOR. Web. 21 Oct. 2013.

Sobel, Lester A. Corruption in Business. New York: Facts on File, inc., 1977. Print.