Liability of Directors in Florida
A corporation’s board of directors is responsible for managing and making decisions that affect the company and its shareholders. With such responsibility comes the risk of liability if a director fails to fulfill their responsibilities. In Florida, the law specifies the circumstances under which a director can be held personally liable for monetary damages.
A director is not personally liable under Florida law for any statement, vote, decision to take or not take action, or failure to take action as a director. There are, however, exceptions to this rule.
Furthermore, a director can be held liable in a proceeding brought by or on behalf of the corporation to obtain a judgment in its favor, or by or on behalf of a shareholder, if they demonstrated conscious disregard for the corporation’s best interests, or willful or intentional misconduct. A director can be held liable in a proceeding brought by or on behalf of someone other than the corporation or a shareholder for recklessness or an act or omission committed in bad faith or with malicious intent, or in a manner demonstrating wanton and willful disregard for human rights, safety, or property.
It’s important to note that recklessness is defined as an action or omission to act in conscious disregard of a risk known or so obvious that it should have been known to the director, and known or so obvious that it should have been known to be so great as to make it highly probable that harm would follow from such action or omission.
A director must not derive an improper personal benefit from any transaction in order to avoid personal liability. However, if the transaction and the nature of any personal benefit obtained by the director are not prohibited by state or federal law or regulation, the director is not considered to have obtained an improper personal benefit. Furthermore, in an action other than a derivative suit involving a director’s decision to approve, reject, or otherwise influence the outcome of an offer to purchase the shares of, or effect a merger of, the corporation, the transaction and the nature of any personal benefits derived by a director must be disclosed or known to all directors voting on the matter, and the transaction must be authorized, approved, or ratified by at least two directors who comprise a ma (whether or not such disinterested directors constitute a quorum). Alternatively, the transaction must be fair to the corporation when authorized, approved, or ratified, as determined by s. 607.0832.
In conclusion, directors of a corporation in Florida must exercise due diligence and act in the best interests of the corporation and its shareholders. If a director breaches their duties, they can be held personally liable for monetary damages in certain circumstances. Contact one of our experienced attorneys today to understand the law and take steps to avoid personal liability.