Corporate Board Training: Your Rights and Your Duties

Presented by: Dar’shun N. Kendrick, Esq./M.B.A., Owner of Kendrick Law Practice, LLC (www.kendricklaw.net) (678) 739-8109

Background•About my Firm•About Me

So you’ve joined a non-profit Board…• Rewards

▫Social accountability▫Social interaction▫Doing “good”

• Responsibilities= Fiduciary (relationship of “trust”)▫Accounting▫Legal▫Management▫Personnel▫Loyalty▫Full Disclosure▫Due Diligence

It is NOT EASY to prove that a Board Member or officer violated their FIDUCIARY duties

because of the “Business Judgment Rule” (BJR)

Responsibilities(1) Duty of Care (2) Duty of Loyalty

• Prong No. 1- In “good faith” AND

• Prong No. 2- With care of ordinarily prudent person▫ Due diligence

• RULE No. 1: Loyalty to the organization FIRST▫ Conflicts of Interest

• RULE No. 2: Full disclosure▫ Conflicts of Interest

ExamplesDuty of Care Duty of Loyalty

•Ex. 1- “Good faith” AND

•Ex. 2- Ordinarily prudent person

•WITHOUT prompting Example

•Ex. 1- Usurping Corporate Opportunity

•Ex. 2- “Self dealing” requires disclosure

•Competing Example

In a Court proceeding…

•1- Presence of D & O Insurance•2- The burden is on the Plaintiff•3- AUTOMATIC PRESUMPTION given

•4- “Case by case” evaluation•5- Verdict and Judgment

Lasting Thoughts

•Be calm but vigilant! •Have questions? ▫(678) 739-8109▫dkendrick@kendricklaw.net

•Limits of legal representation