[CCWG-ACCT] question on fiduciary duties and their objectivity

[Arun Sukumar]

Fairly certain there would be case law on this question, so if our counsel
could flag Jorge's question, that would be very useful to the CCWG.

arun

On Thu, Oct 1, 2015 at 2:11 PM, <Jorge.Cancio at bakom.admin.ch> wrote:

> Dear all,
>
>
>
> During the debates we had on the last conference call I put forward a
> question which I feel could be important to better understand under
> Californian corporate law.
>
>
>
> This is whether there are any means to subject the exercise of “fiduciary
> duties” (by the Board) to objective standards.
>
>
>
> As I have understood the discussion so far, the membership model allows
> the member to override “fiduciary duties” of the Board. However the member
> itself has no fiduciary duties vis-à-vis the organization.
>
>
>
> On the other hand, fiduciary duties are apparently a useful tool within
> corporate law, as it imposes a duty to care for the welfare of the whole of
> the organization.
>
>
>
> The argument which is made by some, as far as I understand it, is that
> there is however a problem in the exercise of “fiduciary duties” as it
> would provide the Board with an “arbitrary” power, e.g. to override
> community decisions (in exercise of community powers) without being bound
> to any objective standards.
>
>
>
> Considering all this, my question (to the Lawyers, if this is certified as
> a question to them) would be: is there any means under Californian Law (or
> other US jurisdictions…) that would allow to subject the exercise of
> fiduciary duties to objective standards? (e.g. be it through concretizing
> these duties in the Bylaws, subjecting them to arbitration, imposing
> special requirements on the rationale needed to be provided if they are
> used to override community decisions, or, for instance, imposing
> extra-supermajorities in the Board in order to being able to invoke such
> duties?)
>
>
>
> Hope this helps,
>
>
>
> Regards
>
>
>
> Jorge
>
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>


-- 
-
@arunmsukumar <http://www.twitter.com/arunmsukumar>
Senior Fellow, Centre for Communication Governance <http://www.ccgdelhi.org>
National Law University, New Delhi
Ph: +91-9871943272
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