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How Did His Act Breach The Fiduciary Duty Of Loyalty To The Company

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How Did His Act Breach The Fiduciary Duty Of Loyalty To The Company
Issue: Without informing Loft, Inc.’s board, Guth set up a new corporation to obtain the secret syrup and formula of Pepsi Cola. Did his act breach the fiduciary duty of loyalty to the company?

Rule: Corporate officers and directors are not allowed to use their power to advance their own interests.

Application: The new corporation, which contained Pepsi Cola’s secret formula and trademark should belong to Loft Inc., not to Guth personally. Guth must be loyal to his corporation, which was Loft Inc., and prevent any conflict between his duty and his self-interest to Loft Inc. However, he failed to offer the new corporation to Loft Inc., and appropriated it for himself.

Conclusion: Without informing Loft, Inc.’s board, Guth set up a new corporation
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