What is the duty of loyalty and care?

The duty of loyalty and care refers to the legal and ethical obligations that directors and officers of a corporation owe to the organization and its stakeholders. The duty of loyalty requires them to act in the best interests of the corporation, avoiding conflicts of interest and self-dealing. The duty of care mandates that they make informed and prudent decisions, exercising reasonable judgment and diligence in their responsibilities. Together, these duties ensure that leaders prioritize the corporation's welfare and act responsibly in their governance roles.