Corporate opportunity is a legal term that describes a situation in which a corporate executive or board of directors are presented with an opportunity that could benefit the corporation. In this situation, the executive or board of directors must make a decision about whether to pursue the opportunity or not, while considering what is in the best interests of the corporation as a whole.
When a corporate opportunity arises, corporate executives must remain impartial in evaluating the situation while also taking into account potential risks to the corporation and its shareholders. If an executive or board of directors do pursue the opportunity, they must act in good faith and consider only the best interests of the corporation. It is a breach of their fiduciary duty to the corporation to pursue opportunities that would solely benefit themselves.
Modern Examples of Corporate Opportunity
One recent example of a corporate opportunity is the formation of a new public investment fund proposed by the chief executive of a large financial services firm. The purpose of the fund is to give the firm an opportunity to invest in assets that are not readily available in the public markets. In evaluating this opportunity, the board of directors must consider the potential rewards and risks to the corporation in order to make an informed decision.
Another example is when a corporate executive is presented with the opportunity to invest in a new startup technology company. The executive will need to consider the potential reward of a successful investment against the risks of loss or mismanagement. If the executive decides to pursue this opportunity, they must ensure that they are doing so in the best interests of the corporation and its shareholders.
Conclusion
In summary, corporate opportunity is a legal term that describes a situation in which a corporate executive or board of directors are presented with an opportunity that could benefit the corporation. Executives and board members must make an informed decision about whether to pursue the opportunity or not, while considering what is in the best interests of the corporation and its shareholders. In any situation, executives and board members must act in good faith and with the best interests of the corporation in mind.