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Duty of Candor
A final fiduciary duty is the duty of candor or the duty of disclosure. Like good faith, the duty of candor is not an independent fiduciary duty, but rather - depending on the circumstances - a subsidiary element of the duty of loyalty or care. The duty of candor implicates a series of legal obligations under both state corporate law and Federal securities laws. The Wayport case that follows summarizes how the duty of candor is implicated depending on the circumstance.
In Mindbody that follows, we see a relatively common example of a CEO being less than candid with his board of directors and stockholders in the context of a sale of the corporation, resulting in the court assigning monetary damages to the less than candid CEO.
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