Glossary: Usurping a Corporate Opportunity

Usurping a Corporate Opportunity

Usurping a Corporate Opportunity - Officers or directors have a duty not to usurp a corporate opportunity. A corporate opportunity is generally considered to be any advantage the exploitation of which by an officer or director would be unfair to the corporation. Factors to consider include whether the opportunity was discovered by an officer or director when acting in his or her corporate capacity; whether the corporation can actually take advantage of the opportunity; whether any corporate funds were used to acquire the opportunity. So what should an officer or director do in a corporate opportunity situation? To avoid liability for usurping a corporate opportunity, the officer or director should immediately offer it to the corporation and only act on it after the corporation has rejected it. Also see Duty of Loyalty.

Disclaimer: The foregoing is intended to provide general information and may not be suitable in specific instances. The glossary information is not intended to be exhaustive, but rather to illustrate typical considerations. The material is provided with the understanding that it is not legal, accounting, tax or any other professional advice.

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