Articles Posted in Fiduciary Duty

Members of an LLC, business partners, corporate officers, and directors have a fiduciary duty of loyalty to act in the best interests of the company. One of the most important obligations that a fiduciary must uphold in business is to avoid conflicts of interest and engaging in self-dealing. Simply put, self-dealing is illegal conduct that…

Members of a Limited Liability Company (LLC) owe certain fiduciary duties to the LLC and each other under Illinois law. Among the most important are the duties of care and loyalty. Unfortunately, LLC members can sometimes violate their fiduciary duties to the company by placing their own interests above the interests of the company or…

Illinois law specifies that any shareholder in a close corporation owes a fiduciary duty not only to the corporation, but to other shareholders. This includes minority shareholders. In addition, the shareholders of a regular corporation might also owe a fiduciary duty when the corporation operates in the same way as a close common law corporation…

There are many situations in business that involve a fiduciary duty. These types of relationships may arise between directors, officers, controlling shareholders, and with any party that has an obligation to act in the best interests of another. If this duty is breached, the injured party may incur considerable costs and suffer reputational harm. However,…

In business, directors, officers, and controlling shareholders owe each other and the corporation certain duties. This means that they are trusted to act in the best interests of the company when making business decisions and carrying out transactions. However, officers, directors, and other fiduciaries may sometimes fail to act in the best interests of the…

“Because Wallace and Joan have not authorized dividend distributions, Martin has received no financial benefit from his minority interest in E&E. Meanwhile, Wallace has approved his own annual compensation in the millions of dollars.” Smith v. Smith, 2020 U.S. Dist. LEXIS 81240, *3 (E.D. Mich. May 8, 2020). The Smith case, pending in the U.S.…

Disorganization, financial difficulties, and greed can lead to a partner taking more from a business than they’re entitled. This, of course, comes at the expense of their partners. In closely held businesses, there are unfortunately numerous ways to cheat. A few examples are a partner funneling money to another entity he or she owns under…

In a recent order, the Appellate Court affirmed a Cook County trial court decision finding that a de facto LLC manager in a manager-managed LLC: (1) had fiduciary duties to the other members despite not being the legal manager; and (2) breached his fiduciary duties to his co-owners by running the business and finances without…