Director Bella Meese is the wife of George Meese, the "Content Coordinator" of a monthly publication called "The Villages of Sun City Anthem".
In a previous artlcle reports have circulated that revenue from "The Spirit" magazine, published by the Sun City Anthem association has been affected negatively as a result of this publication.
We asked the association president to report the revenue received from advertising placed in The Spirit prior to and following this new publication in order to remove any suspicion of a potential breach.
SHE HAS IGNORED OUR REQUEST.
We believe competition is healthy; however, when it involves a benefit to a family member of an association board member, the question of conflict of interest arises, as per the rules of upholding a fiduciary duty.
We have printed the legal requirements of upholding such a duty...and the penalties that may result if breached.
Accordingly, we URGE the president ONCE AGAIN, to publish the revenue figures in order to remove the cloud that currently hovers over this candidate for our Board.
The Sun City Anthem Board of Directors has been
named in a complaint in a section of the Nevada NRS
116 code pertaining to "common interest communities", i.e. homeowners
associations.
An important section of this
code...is
Just what are the duties of a
"fiduciary"?
Directors and Officers of both for-profit and not-for-profit
corporations owe their corporation a fiduciary duty.
A fiduciary duty is an obligation that one party will act in the
best interest of another party.
In the case of
corporate directors, the director holds the fiduciary duty to act in the best
interest of the corporation.
The law
imposes this duty upon the officers or directors of corporations because they
control and manage the corporation on behalf of its shareholders, and thus must
manage the corporation with care.
The concept of a fiduciary duty is a simple one:
...to act in
the best interest of others, and thereby to define what actions uphold that
interest or violate it.
In order to be
more specific about what a director must do or must not do, we often refer to
the specific fiduciary duties as fitting into two
categories:
1. The Duty of Loyalty
2. The Duty of Care.
Upholding the Duty of
Loyalty
1. Avoid self-dealing.
A self-dealing transaction in one in which a director enters into
on behalf of the corporation that directly or
indirectly benefits the director personally.
For example, let us assume that the director represents a
corporation that operates hotels. The hotel chain is looking to contract with a
laundry company to clean the hotel’s linens.
The director of the hotel company enters into a contract on behalf
of the hotel with the director’s own laundry company at a price that is twice
the cost of other laundry companies for the same services.
In this situation, the director of the hotel company engaged in
self-dealing because he entered into a contract on behalf of the hotel in order
to unfairly benefit his own personal
interests.
2.
Avoid conflicts of interest.
A conflict of interest arises when the director of a corporation
has an interest in both the corporation and some entity that the corporation is
dealing with.
This can take the form of the director being a shareholder of
another company that the corporation is dealing with, the director having a
competing business, or the director’s close family member standing to benefit
from a contract that corporation intends to enter into.
If a director has a conflict of interest, he or she must disclose
that conflict of interest to the board.
Failure to disclose the conflict is a breach of the duty of
loyalty.
Simply having a conflict of interest does not preclude a director
from serving on a board.
The board should, however, limit that director’s involvement with
the decision making on those matters in which the conflict arises.
If the director must be involved in the decision-making of a deal
in which he or she has a conflict of interest, other independent board members
should sign off on the deal as well.
3.
Avoid taking an opportunity away from the corporation.
If an opportunity presents itself to a director or officer of a
corporation that may be an opportunity for the corporation, the director or
officer must present that opportunity to the corporation.
The officer must not take the corporate opportunity for himself or
herself to the detriment of the corporation.
There is a high penalty placed upon the director for doing so: all
the profits from the “stolen” transaction will be taken from the director and
given to the corporation.
An example of a violation of the corporate opportunity is if a
director learns of the sale of a certain piece of property that could be of
substantial value.
If the company the director works for deals with real estate of
the type that the director learns about, and the director purchases the property
anyway, the director violated his or her fiduciary duties owed to the
company.
Upholding the Duty of
Care
1. Act in good faith.
The concept of acting in good faith means the intention to act
honestly and fairly.
It also means that the director is not acting to defraud.
A director should not have any ulterior motives for working with
the corporation.
An example of acting in bad faith is knowingly lying to other
board members or shareholders or wrongfully withholding information.
If an officer or director is proven to have acted in bad faith,
the company may sue the officer or director for any damages caused to the
company as a result of the director or officer’s bad faith.
2. Make reasonable
decisions.
A director must act reasonably in making decisions on behalf of the
company.
This does not mean that the director has to make the right decision
every time.
Sometimes a director may use the utmost care in making a decision
but the deal may not turn out well. That does not mean that the director
violated his or her fiduciary duty of care.
A violation of this duty may result from completely failing to
oversee the board, or not reviewing a contract before entering into it.
Upholding this duty means actively participating in the business of
the company. Staying engaged in board meetings, seeking reports for committees
that the director is not a member of, keeping good records and reviewing them
often, and investigating any business transactions before they are entered into
are all examples of upholding the duty of care.
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