All state jurisdictions impose duties on corporate directors both at common law and under most state corporate statutes.  Directors are thus under a legal obligation to govern their corporation and to carry out their responsibilities of office:

• In good faith,
• in the best interest of the corporation, and
• with the care that an ordinarily prudent person in a like position would exercise under similar circumstances.

Directors and officers stand to risk their personal financial health if they do not protect themselves against the following:

• failure to properly discharge their duties, or
• failure to meet the standards of expected conduct as set forth in applicable federal and state statutes.

The most important precaution that any director of officer can take is to ensure that there is no basis for alleging improper actions.  The following four precautions are generally available and corporate directors or officers should fully understand them:

• due diligence:  avoiding liability by taking all reasonable care;
• dissent:  avoiding liability by dissenting from any proposed action, unless convinced that such action based on reasonable inquiry is in the best interest of the corporation;
• acting in such a way as to facilitate exoneration:  honest and reasonable conduct that should fairly and reasonable be excused from a default or breach; and
• resignation:  avoiding the accrual of further liabilities by resigning at the appropriate time.