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Fiduciary Duty

By IncNow | Published October 19, 2013

A fiduciary duty is a duty that anyone acting on behalf of a business owes to the business, including the stockholders. Breaches of this duty can result in liability for monetary damages, including lawsuits by shareholders or derivative claims (where an individual sues the business to make the business sue the individual who breached his duty). In an LLC, fiduciary duties can be heightened, reduced or eliminated, which is unusual since in corporations this is not the case. This is another reason to consider the LLC as a form of business entity. Reducing or eliminating the fiduciary duty of managers and majority owners can provide more flexibility to run the business how they see fit.

When deciding where to form your company, consider that Delaware has advantages over your home state that may benefit you. Go