Question

First Niles Financial, Inc., is a company whose sole business is to own and operate a bank, Home Federal Savings and Loan Association of Niles, Ohio. First Niles's directors included bank officers William Stephens, Daniel Csontos, and Lawrence Safarek; James Kramer, president of an air-conditioning company that serviced the bank; and Ralph Zuzolo, whose law firm served the bank and whose title company participated in most of its real estate deals. First Niles's board put the bank up for sale and received three bids. Farmers National Bank Corp. stated that it would not retain the board. Cortland Bancorp indicated that it would terminate the directors but consider them for future service. First Financial Corp. said nothing about the directors. The board did not pursue Farmers' offer, failed to timely respond to Cortland's request, and rejected First Financial's bid. Leonard Gantler and other First Niles shareholders filed a suit in a Delaware state court against Stephens and the others. What duties do directors and officers owe to a corporation and its shareholders

Answer 1

Answer: Please refer to Explanation

Step-by-step explanation:

The Directors and Officers of a Corporation owe to a Corporation and it's shareholders various duties such as Loyalty, Prudence, Care and Fair Dealing.

They are to act in the interest of the shareholders at all times which means their own personal interest should be put behind that of the shareholders as they work to maximise shareholder wealth.

If it is proven that the Directors and Officers of First Niles analysed the bids on the bank based on their personal interests namely, the keeping of their position as board members, and therefore rejected these bids based on the unwillingness of the bidding companies to keep them as Board members, then that constitutes a Breach of the duties expected of them.