Corporate Opportunities | Think Realty | A Real Estate of Mind

Abstract

What is Corporate Opportunity? A corporate opportunity is any investment, purchase, lease, or any other opportunity that is in the line of the corporation's business and is of practical advantage to the corporation. The duty of loyalty requires officers and directors to apprise the corporation of "Corporate opportunities." The corporation gets to decide if it wants it or not. If the corporation turns down one opportunity, is the officer then able to pursue it? Guidelines Delaware courts have established a test for corporate opportunities. The law will not permit an officer to pursue opportunities that: On the other hand, if the corporation is not financially able to embrace the opportunity, has no interest in the opportunity, and the officer does not diminish his or her duties to the corporation by exploiting the opportunity, then the person may be allowed to pursue the opportunity. If the corporation cannot or will not take advantage of the opportunity, the employee, officer, or director may be free to pursue the opportunity. After the corporation has rejected the opportunity, and before pursuing the opportunity, the employee, officer, or director should unambiguously disclose that the corporation refused to pursue the opportunity and ensure there is an explanation for the refusal. Although there are no certain guidelines for determining which opportunities belong to the corporation, controversy and liability may be avoided if officers use rigorous caution regarding corporate opportunities.