What does it mean for a director to owe a fiduciary duty to the corporation?

A fiduciary duty is a duty of loyalty. A director who owes a fiduciary duty to the corporation must put the corporation's interests ahead of their own personal interests. Under the Ontario Business Corporations Act, directors and officers must act honestly and in good faith with a view to the best interests of the corporation. This duty is non-delegable and continues as long as someone holds the position.

In practice, fiduciary duty rules require directors to disclose any material conflict of interest, refrain from voting on contracts in which they have a personal stake, and avoid using confidential corporate information for personal gain. A director who secretly profits from a business opportunity that should have been offered to the corporation — often called the "corporate opportunity doctrine" — may have to account to the corporation for those profits.

The duty also extends beyond shareholders to encompass the corporation as a whole, and in certain circumstances courts have recognized obligations to other stakeholders. Directors facing situations where their personal, family, or other business interests intersect with corporate decisions should seek independent legal advice before acting.