Also known as: business opportunities
Written by attorneys · grounded in primary & secondary sources — see below
A potential transaction or venture that falls within a corporation's line of business or in which the corporation has an interest or expectancy. A director or officer who learns of the opportunity must present it to the corporation before pursuing it personally unless the corporation disclaims interest through proper procedures or the articles of incorporation eliminate the duty.
Boubacar Bah, a director of Boulder Construction, learns of a municipal contract to build a new bridge that matches the company's expertise. Before signing any agreement, Bah discloses all material facts about the project to the qualified directors. The board follows section 8.62 procedures and formally disclaims interest, allowing Bah to pursue the contract without liability.
Benjamin Brooks, an officer of Brighton Manufacturing, identifies a supply-chain acquisition opportunity. Brooks discloses every known material fact to the shareholders before any obligation arises. The shareholders then approve a disclaimer under the procedures of section 8.63, freeing Brooks to take the deal personally.
Select any source to read its text and confirm it supports the definition.
Blake Butler serves as a director of Bay Area Systems. The company's articles contain a provision adopted under section 2.02(b)(6) that eliminates any duty to offer business opportunities to the corporation. Butler therefore acquires a software licensing deal without first presenting it, and the corporation has no claim.
Bianca Baker, president of Barclay Financial, learns of an investment advisory contract that fits the firm's core services. Baker forms a separate entity and signs the contract without disclosure. The corporation sues, claiming the opportunity belonged to it under the corporate opportunity doctrine.
Bobby Brady controls Sinclair Oil Corp., which owns Sinven. While Sinven has cash and could expand, Sinclair pursues new revenue sources through other subsidiaries and denies Sinven participation. Minority shareholders challenge the policy as an improper taking of Sinven's business opportunities.
Brittany Bell serves on the board of NCS Health Care. The board negotiates exclusively with one bidder and adopts deal-protection measures that prevent consideration of a later higher offer from Omnicare. Shareholders allege the measures improperly foreclose a superior business opportunity for the corporation.
A director or officer must bring the opportunity to the corporation's attention before becoming legally obligated respecting it. The opportunity must then be disclaimed either by qualified directors under section 8.62 procedures or by shareholders under section 8.63 procedures.
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No. The fact that a director or officer did not follow the procedures in subsection (a)(1)(i) or (ii) does not create an implication that the opportunity should have been offered to the corporation or shift the burden of proof.
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Yes. A provision adopted under section 2.02(b)(6) can limit or eliminate any duty of a director or officer to offer business opportunities to the corporation before pursuing them personally.
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…for all of UOP's debts and sales, but only 50.5 per cent of its earnings, would be eliminated. The exchange of information and business opportunities between UOP and Signal's other subsidiaries would be freed of any potential conflict of interest problems. Significant tax, accounting and insurance savings would be realized, and the cost…