Fiduciary Duties, Directors
The directors of a nonprofit Corporation are in a fiduciary relationship with the members of that corporation, and there is a duty of fair dealing with that membership. A director’s position is one of trust, and he or she is frequently denominated a trustee and so held accountable in equity. The ordinary trust relationship of directors of a Corporation and members is not a matter of statutory or technical law. It springs from the fact that directors have the control and guidance of the corporate business affairs and property and hence of the member’s property interest. Equity recognizes that members are the proprietors of the corporate interest and are ultimately the only beneficiaries thereof. Those interests are in virtue of the law entrusted through the Corporation to the directors and from that condition arises the trusteeship of the directors with the concomitant fiduciary relationship.
The directors of the Corporation are acting in a fiduciary capacity and are required to exercise their authority in the utmost good faith. They cannot rightly manipulate the affairs of the Corporation primarily with the design of securing benefits of the Corporation to one particular member or group of members, or of excluding another group from the exercise of its rights.
Hatch v. Emery 1 Ariz.App. 142, 146; 400 P.2d 349, 353 (App. 1965)
