Directors' Fiduciary Duty Lies with Company, Not Individual Shareholders, Even When Acting on Insider Information.

The fiduciary relationship of a director is primarily with the company, not individual shareholders. Directors may act on insider information without breaching fiduciary duties to shareholders, as illustrated in the case of a director purchasing shares without disclosing ongoing negotiations for a higher buyout. Directors owe no direct fiduciary duties to individual members in managing company affairs. However, they may have fiduciary duties in specific situations involving transactions affecting both the company and individual shareholders. Mismanagement by directors results in liability to the company, not individual shareholders, who cannot claim compensation for share value loss.

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