Fiduciary Duties: The Essential Guide for Startup Founders and Executives

As an entrepreneur or corporate leader, understanding fiduciary duties is critical for sound corporate governance and protecting your company from legal risks. In this article, we’ll dive into what fiduciary duties are, the two main types of duties, and best practices to ensure you and your board are fulfilling your obligations.

What are Fiduciary Duties?

At their core, fiduciary duties are the legal responsibilities that directors and officers owe to the company and its shareholders. When you take on a leadership role, the law requires you to put the company’s interests ahead of your own and make decisions in good faith.

Think of it like being a trustee or caretaker. Shareholders are entrusting you with the stewardship of their assets and relying on you to manage them prudently. Just like you’d expect a trustee to handle your money carefully and not misuse it for their own benefit, shareholders expect corporate leaders to always put the company first.