What is a director’s fiduciary duty?
Directors have the fiduciary duty to represent the interests of the fund’s shareholders and are subject to state law duties of loyalty and care. The duty of loyalty requires that directors use their positions of trust and confidence to further the interests of the fund and its shareholders ahead of their private interests. Fundamental to the duty of loyalty is the avoidance of self-dealing and of conflicts of interest that are detrimental to the fund. The duty of care requires directors to perform their duties in good faith, in a manner reasonably believed to be in the best interests of the fund, and with the degree of care that an ordinarily prudent person in a like position would exercise under similar circumstances. The duty of care also requires that directors be informed, apply their business judgment, and reach reasonable decisions.
