e company passes to a new entity, they may be forced out of their jobs.
The directors have fiduciary duty to the shareholders and the corporation. As described by the Delaware Supreme Court, public policy
demands of a corporate officer or director, peremptorily and inexorably, the most scrupulous observance of his duty, not only affirmatively to protect the interests of the corporation committed to this charge, but also to refrain from doing anything that would work injury to the corporation or to deprive it of profit or advantage which his skill and ability might properly bring to it, or enable it to make in the reasonable and lawful exercise of its powers. The rule requires an undivided and unselfish loyalty to the corporation and demands that there shall be no conflict between duty and self interest.
The directors' fiduciary duty includes a duty of care and a duty of loyalty. Included within the duty of care is a duty to inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of care also requires that the directors reasonably inform themselves of alternatives. This has been interpreted as requiring the directors to take greater care in probing and considering alternatives in decisions dealing with more significant subject matter. Such significant subject matter includes the decision to sell the company or to recapitalize the firm in such a way that control of it will change. Once the directors have become so informed, they must act with requisite care in carrying out their duties. Good faith is irrelevant when making a determination whether the directors as a board exercised informed business judgment.
The duty of loyalty is an even broader duty which can impose special obligations upon a director in any of his or her relationships with the corporation under certain circumstances. The duty of loyalty includes an affirmative duty to pro...