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Duty of Candor Explained



Duty of Candor Explained

In the field of corporate the law, the duty of candor refers to a fiduciary duty of a company’s management and board members to disclose all the material information required for evaluating the company and its management, to its shareholders.

A Little More on the Duty of Candor

It is a legal provision under state corporate law (and under the Model Business Corporations Act). A company’s management needs to provide all the material information, fully and fairly to its shareholders on the first instance. The board needs to monitor the process. The provision allows the board to rely on the management’s declaration and accept that information as complete and accurate unless they have a direct knowledge of any misconduct.

References for Duty of Candor

https://www.gsb.stanford.edu/faculty-research/centers-initiatives/cgri/research/glossary


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