8. Owner Agreements – Whether by a Shareholder Agreement in a corporation or an Operating Agreement in an LLC or the basic tenants of a Partnership Agreement, these and other corporate documents are designed to provide the rules and regulations of how to operate the business. Follow them.
9. Act In Good Faith – In managing the company for the benefit of the company and the other owners, always act in good faith, in the best interest of the company as you would expect a reasonable management person to do under the circumstances. Investigate, gather information and make informed decisions for the benefit of the company and its owners. By doing so you will be protected under the law by the Business Judgment Rule. Generally if you exercise business judgment for the benefit of the company and in good faith you are acting prudently. Even if your business decision may not be the best one, you properly discharged your responsibility. You have the right to rely on others and in particular professionals who provide input into the decision making beyond your expertise. If you even think there may be a conflict between you and the company regarding a business decision, opportunity or contract, bring it to the attention of the other owners and have it approved by them or ensure that it is fair to the company.
This post is part of an 8 post series.