What is meant by 'fiduciary duty of care'?

The fiduciary duty of care refers to the obligation of directors and officers of a company to make informed and responsible decisions in the best interests of the corporation. This means that when making decisions, they must consider all relevant information, act with diligence, and exercise professional judgment to ensure that their actions align with the interests of the company and its shareholders.

This duty is rooted in the legal principle that fiduciaries—those who act on behalf of others—must put the interests of those they serve ahead of their own. In the context of company law, it emphasizes the importance of careful consideration and thoughtful decision-making processes, which can help to avoid negligence and potential harm to the company.

Understanding this duty is fundamental in corporate governance, as it encapsulates the expectation that corporate insiders will act not only with competence but also with loyalty to their organization. This sets the foundation for how fiduciaries should conduct themselves to uphold the trust placed in them by the shareholders and stakeholders alike.

The other options reflect various responsibilities within corporate governance but do not accurately capture the essence of fiduciary duty of care as it is specifically focused on decision-making processes. For example, responsibility for audits pertains more to financial oversight, maximizing shareholder profit relates to an outcome rather than the decision-making process