Directors' and officers' fiduciary obligations,greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Food for thought. Just what will be the definition of "Adequate" when all is said and done? LINK
Directors responsibilities with regard to the legal implications of the Y2K problem are extended by the concept of fiduciary duty. In general terms, this concept places a legal obligation on directors and corporate officers to act in good faith, honestly and with due care in the best interests of their company. If a company were to incur losses due to the failure of directors to address their Y2K problems adequately, they may be found to be in breach of duty. In some instances, the corporate veil might be lifted and directors may face personal liability. At least one commentator has observed in the US that even if directors escape personal liability for failing to exercise due care in this situation, their careers would be devastated. Capers Jones of Software Productivity Research speculates that some directors may try to put off the cost of achieving Y2K compliance, reasoning that it might exceed the amount of potential loss caused by non-compliance. Combining data from surveys of executive responses to the Y2K problem with the probability that damage resulting from lack of preventative action might result in legal action, he has formulated a legal risk matrix to illustrate the potential personal exposure of directors who fail to address the Y2K issue adequately (see Figure 1
-- y2k dave (firstname.lastname@example.org), November 27, 1999
---love these legal posts you are doing. An honest question, and I'm not being a wiseacre, this is a legit question. How far "down" the food chain in a corporation do you contemplate that "responsibility" will go, once the lawsuits begin? And especially if someone dies because of a y2k failure at some point? And how far back in time will the digging and interconnectedness go? And what constitutes liability? Telling your boss once that this is gonna be bad, we should fix this? Are you off the hook then? But suppose it's something that he or she or they(the bosses) can claim they WEREN'T informed enough about in order to make correect, responsible "executive decisions'? Will that be enough to mitigate your(the lower down the food chain worker-on-y2k) personal potential "blame"? I'm just curious, just as an exercise. I don't personally think that the legal/alledged "justice" system as now "practiced" will be around much longer. But I like theoretical discussions.
zog the ponderer
-- zog (email@example.com), November 27, 1999.
I am an Exec. Director for two non-profits with RTGI (refuse to get it) volunteer officers and directors. I looked into the extent of their fiduciary reposibility with our federation's attorneys. They said that a member would have to be injured in some way (physical, financial) in order for them to have standing to sue the officers or directors for neglect. They couldn't see any case where this could be so (other than in the physical building.)
I had hoped to use it as a leverage point to wake up my directors, but it only put them deeper into peaceful slumber on the issue.
-- marsh (firstname.lastname@example.org), November 27, 1999.