What Are The Main Types Of Business Fiduciary Duties?
A Fiduciary is someone who acts on behalf of the company. That definition can be a little loose, but in general, directors and majority shareholders are considered to have fiduciary duties. To help expand this definition we look at the different types of fiduciary duties that Oklahoma City businesses may use.
1. Duty of Care
When you have the authority to act for the company you need to do so with care. That means following the rules within the policy and procedure manual. It’s important to seek help from people who are experienced in dealing with a particular situation. It also means acting in a way that protects the company as best you can.
2. Duty of Good Faith
One of the more complex fiduciary duties is the Duty of Good Faith. What this means is putting the company’s well-being ahead of your own. The decisions you make are based on the needs and security of the company you serve.
In the Duty of Care responsibility, you might be required to do background checks on all new executive applicants. Under Duty of Good Faith, you are required to use the information in the background checks to make sure that the person who is hired meets the requirements of the job and does not have a criminal history.
3. Fiduciary Duty of Loyalty
The duty of Loyalty is similar to the Duty of Good Faith. The difference is that it applies to your relationship with your company. Under the duty of loyalty responsibility, you would not want to create situations where you personally gained from the destruction or damage to the company. You are there to act in good faith and protect the company through your actions. In that sense, you are putting the company ahead of your own interests, thus staying loyal to the company.
Putting It All Together
These three fiduciary duties create a situation where you are to act in the best interest of the company for which you work. You are to make sure that you do all the steps required by each policy and procedure for the task given. If you are hiring an employee, you would follow the guidelines set out by the company, and you would not skip steps.
For example, if the job opening was for a position where a criminal background check is required, then you would not skip that step even if you knew the applicant personally. If the background check had something negative in it, you would consider that and not dismiss it. If the applicant was your brother-in-law, you would not hire them if they had something in their background check that was in conflict with the moral and ethical attributes of the position.
Call Brown & Gould For More Information About Fiduciary Duties
For more help with understanding fiduciary or legal help protecting yourself from the fallout from failed fiduciary duties, give us a call. At Brown and Gould, we help people navigate the civil and business legal arenas. Contact us today and discover your rights.