Boards of Directors Owe Fiduciary Duties to Preferred Shareholders

摘要

The law with respect to fiduciary duties owed by boards of directors to preferred shareholders is far from settled. Many directors hold the mistaken view that corporate boards of directors owe no fiduciary duties to preferred shareholders and that the rights of preferred shareholders are governed entirely by the law of contracts. The rights of preferred shareholders, however, are not limited solely to those enumerated in the certificate of designations. It is thus important to closely examine the obligations owed by directors to preferred shareholders, especially in the structuring of corporate transactions that benefit common shareholders at the expense of preferred shareholders.