Duty Of A Service Relationship - 1929 Words

Fiduciary duty is a service relationship whereby the individual that owes the duty or the trust, such as the board of directors to the individual empowering the trust, such as the shareholder, performs a service. The board of directors carry out the services to the best of their ability on behalf of the individuals empowering them with that authority. Directors or board member’s responsibilities are to be aware not only of the Witten laws- statutes, thing that they are responsible for but also to unwritten law- precedent and their duties. These duties are: duties of care, diligence, obedience, loyalty and so on. Fiduciary duty or duty of care is exercising a judgement that is reasonable an important person would exhibit and process of†¦show more content†¦Duty of loyalty is important for the survival of an organization and its stakeholders. For example, the director of a company when issuing shares to the public creates an obligation in the part of the company to the shareholders. The directors of a company by using the shareholders’ investment must make sure that he/she does not create any conflict of interests between the company objectives, the shareholders, the managers and all the staff. Using the shareholders’ money to create an economic benefit to the directors only is considered to be a breach of fiduciary duties. In contrast, the directors must act in the best interest of the company and the shareholders. While performing its duties and responsibilities, directors and executives must also respect and be obedient to the organisation, its mission, by laws and policies as well as honouring all terms and conditions of other standards that will be appropriate such as laws, rules and regulations. This forms part of the duty of compliance. Moreover, directors have Duty to manage Accounts. The board members are responsible for the charities, financial stability and accountability. they do this by primarily establishing procedures to keep the organisation operating in a fiscal manner. Board members are obligated to honour the standards with regard to all decisions and actions. Furthermore, Due Diligence is the care that a reasonable person exercises under the circumstanced to avoid harm to other persons on their