Part II Governance Structures and Regulation, 7 Responsibility of Directors of Financial Institutions »
Steven L Schwarcz, Aleaha Jones, Jiazhen Yan
From: Governance of Financial Institutions
Edited By: Danny Busch, Guido Ferrarini, Gerard van Solinge
This chapter details the governance responsibilities of directors of financial institutions in the United States and worldwide. The fiduciary duties of directors of firms, including financial institutions, are owed primarily to the firm to act in the firm’s best interests. Invariably, the fiduciary duties of directors to the firm include the duty to consider the interests of the firm’s shareholders. Both in the United States and in the European Union, directors' fiduciary duties are often discussed as a duty of care and a duty of loyalty. While its exact formulation varies in different jurisdictions, the duty of care addresses the standard by which directors conduct business operations and activities. On the other hand, the duty of loyalty addresses conflicts of interest between a director and the firm. The chapter then examines the mechanisms for enforcing fiduciary duties.
