Fiduciary Duties of Former Directors of Delaware Corporations
It is well understood that directors of Delaware corporations are subject to the fiduciary duties of care and loyalty. In general, the duty of care requires directors to base their decisions on all material information reasonably available, and the duty of loyalty requires directors to act in good faith on an independent and disinterested basis to advance the best interests of the corporation and its stakeholders.
What is less discussed are the fiduciary duties owed to a corporation by its former directors. While former directors generally owe no fiduciary duties once they resign from the board of directors of a corporation, there are some notable exceptions to this rule. Directors looking to step down from their director position should keep such exceptions in mind.
In BelCom, Inc. v. Robb, the defendant was a former director and major shareholder of a Delaware corporation. The corporation sued the defendant director for, among other things, breach of his fiduciary duties by submitting for reimbursement millions of dollars in frivolous expenses and, when the corporation refused to pay, initiating a campaign of harassment to coerce payment from the corporation, including by encouraging key employees at the corporation to demand indemnification agreements because of litigation that the defendant himself threatened to bring against the corporation.
The court held that the defendant breached his duty of loyalty to the corporation. In holding that the defendant could be liable for breaches of the duty of loyalty that occurred both before and after his removal as a director, the court explained that a “former director, of course, breaches his fiduciary duty if he engages in transactions that had their inception before the termination of the fiduciary relationship or were founded on information acquired during the fiduciary relationship” (BelCom, Inc. v. Robb, Civil Action No. 14663, 1998 Del. Ch. LEXIS 58, *9, (Del. Ch. April 28, 1998)).
BelCom demonstrates that a former director of a Delaware corporation may have liability for breach of fiduciary duties where the underlying actions and damages result from a transaction that began during the time the defendant was a director.
The rule in Belcom has been upheld a few times. For example, and importantly, in Neurvana Med., LLC v. Balt USA, a former director was found to have “breached his fiduciary duties by using confidential information and knowledge that he acquired before his resignation” to harm a corporation. (Neurvana Med., LLC v. Balt USA, C.A. No. 2019-0034-KSJM, 2020Del. Ch. LEXIS 77, *26 (Del. Ch. Feb. 27, 2020)). Additionally, in Leased Access Pres. Ass'n v. Thomas the court held a former corporate director was not entitled to dismissal of the corporation’s action against him for breach of his fiduciary duties because the director used information that he learned while he was a director of the corporation to later compete with such corporation in bidding for a contract with a city. (Leased Access Pres. Ass'n v. Thomas, C.A. No. 2019-0310-KSJM, 2020 Del. Ch. LEXIS 227, *9, (Del. Ch. Jan. 8, 2020)).
Former directors of Delaware corporations should be aware that actions taken during their directorship (or even after their directorship, if using information obtained while a director) can carry with them breach of fiduciary duty exposure even after they cease to be a director of such corporation.
This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。
In BelCom, Inc. v. Robb, the defendant was a former director and major shareholder of a Delaware corporation. The corporation sued the defendant director for, among other things, breach of his fiduciary duties by submitting for reimbursement millions of dollars in frivolous expenses and, when the corporation refused to pay, initiating a campaign of harassment to coerce payment from the corporation, including by encouraging key employees at the corporation to demand indemnification agreements because of litigation that the defendant himself threatened to bring against the corporation.
The court held that the defendant breached his duty of loyalty to the corporation. In holding that the defendant could be liable for breaches of the duty of loyalty that occurred both before and after his removal as a director, the court explained that a “former director, of course, breaches his fiduciary duty if he engages in transactions that had their inception before the termination of the fiduciary relationship or were founded on information acquired during the fiduciary relationship” (BelCom, Inc. v. Robb, Civil Action No. 14663, 1998 Del. Ch. LEXIS 58, *9, (Del. Ch. April 28, 1998)).
BelCom demonstrates that a former director of a Delaware corporation may have liability for breach of fiduciary duties where the underlying actions and damages result from a transaction that began during the time the defendant was a director.
The rule in Belcom has been upheld a few times. For example, and importantly, in Neurvana Med., LLC v. Balt USA, a former director was found to have “breached his fiduciary duties by using confidential information and knowledge that he acquired before his resignation” to harm a corporation. (Neurvana Med., LLC v. Balt USA, C.A. No. 2019-0034-KSJM, 2020Del. Ch. LEXIS 77, *26 (Del. Ch. Feb. 27, 2020)). Additionally, in Leased Access Pres. Ass'n v. Thomas the court held a former corporate director was not entitled to dismissal of the corporation’s action against him for breach of his fiduciary duties because the director used information that he learned while he was a director of the corporation to later compete with such corporation in bidding for a contract with a city. (Leased Access Pres. Ass'n v. Thomas, C.A. No. 2019-0310-KSJM, 2020 Del. Ch. LEXIS 227, *9, (Del. Ch. Jan. 8, 2020)).
Former directors of Delaware corporations should be aware that actions taken during their directorship (or even after their directorship, if using information obtained while a director) can carry with them breach of fiduciary duty exposure even after they cease to be a director of such corporation.
This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。
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© 2026 Jenner & Block LLP. Attorney Advertising. Jenner & Block LLP is an Illinois Limited Liability Partnership including professional corporations. This publication, presentation, or event is not intended to provide legal advice but to provide information on legal matters and/or firm news of interest to our clients and colleagues. Readers or attendees should seek specific legal advice before taking any action with respect to matters mentioned in this publication or at this event. The attorney responsible for this communication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome. Jenner & Block London LLP, an affiliate of Jenner & Block LLP, is a limited liability partnership established under the laws of the State of Delaware, USA and is authorised and regulated by the Solicitors Regulation Authority with SRA number 615729. Information regarding the data we collect and the rights you have over your data can be found in our Privacy Notice. For further inquiries, please contact dataprotection@jenner.com.
It is well understood that directors of Delaware corporations are subject to the fiduciary duties of care and loyalty. In general, the duty of care requires directors to base their decisions on all material information reasonably available, and the duty of loyalty requires directors to act in good faith on an independent and disinterested basis to advance the best interests of the corporation and its stakeholders.
What is less discussed are the fiduciary duties owed to a corporation by its former directors. While former directors generally owe no fiduciary duties once they resign from the board of directors of a corporation, there are some notable exceptions to this rule. Directors looking to step down from their director position should keep such exceptions in mind.
In BelCom, Inc. v. Robb, the defendant was a former director and major shareholder of a Delaware corporation. The corporation sued the defendant director for, among other things, breach of his fiduciary duties by submitting for reimbursement millions of dollars in frivolous expenses and, when the corporation refused to pay, initiating a campaign of harassment to coerce payment from the corporation, including by encouraging key employees at the corporation to demand indemnification agreements because of litigation that the defendant himself threatened to bring against the corporation.
The court held that the defendant breached his duty of loyalty to the corporation. In holding that the defendant could be liable for breaches of the duty of loyalty that occurred both before and after his removal as a director, the court explained that a “former director, of course, breaches his fiduciary duty if he engages in transactions that had their inception before the termination of the fiduciary relationship or were founded on information acquired during the fiduciary relationship” (BelCom, Inc. v. Robb, Civil Action No. 14663, 1998 Del. Ch. LEXIS 58, *9, (Del. Ch. April 28, 1998)).
BelCom demonstrates that a former director of a Delaware corporation may have liability for breach of fiduciary duties where the underlying actions and damages result from a transaction that began during the time the defendant was a director.
The rule in Belcom has been upheld a few times. For example, and importantly, in Neurvana Med., LLC v. Balt USA, a former director was found to have “breached his fiduciary duties by using confidential information and knowledge that he acquired before his resignation” to harm a corporation. (Neurvana Med., LLC v. Balt USA, C.A. No. 2019-0034-KSJM, 2020Del. Ch. LEXIS 77, *26 (Del. Ch. Feb. 27, 2020)). Additionally, in Leased Access Pres. Ass'n v. Thomas the court held a former corporate director was not entitled to dismissal of the corporation’s action against him for breach of his fiduciary duties because the director used information that he learned while he was a director of the corporation to later compete with such corporation in bidding for a contract with a city. (Leased Access Pres. Ass'n v. Thomas, C.A. No. 2019-0310-KSJM, 2020 Del. Ch. LEXIS 227, *9, (Del. Ch. Jan. 8, 2020)).
Former directors of Delaware corporations should be aware that actions taken during their directorship (or even after their directorship, if using information obtained while a director) can carry with them breach of fiduciary duty exposure even after they cease to be a director of such corporation.
This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。
In BelCom, Inc. v. Robb, the defendant was a former director and major shareholder of a Delaware corporation. The corporation sued the defendant director for, among other things, breach of his fiduciary duties by submitting for reimbursement millions of dollars in frivolous expenses and, when the corporation refused to pay, initiating a campaign of harassment to coerce payment from the corporation, including by encouraging key employees at the corporation to demand indemnification agreements because of litigation that the defendant himself threatened to bring against the corporation.
The court held that the defendant breached his duty of loyalty to the corporation. In holding that the defendant could be liable for breaches of the duty of loyalty that occurred both before and after his removal as a director, the court explained that a “former director, of course, breaches his fiduciary duty if he engages in transactions that had their inception before the termination of the fiduciary relationship or were founded on information acquired during the fiduciary relationship” (BelCom, Inc. v. Robb, Civil Action No. 14663, 1998 Del. Ch. LEXIS 58, *9, (Del. Ch. April 28, 1998)).
BelCom demonstrates that a former director of a Delaware corporation may have liability for breach of fiduciary duties where the underlying actions and damages result from a transaction that began during the time the defendant was a director.
The rule in Belcom has been upheld a few times. For example, and importantly, in Neurvana Med., LLC v. Balt USA, a former director was found to have “breached his fiduciary duties by using confidential information and knowledge that he acquired before his resignation” to harm a corporation. (Neurvana Med., LLC v. Balt USA, C.A. No. 2019-0034-KSJM, 2020Del. Ch. LEXIS 77, *26 (Del. Ch. Feb. 27, 2020)). Additionally, in Leased Access Pres. Ass'n v. Thomas the court held a former corporate director was not entitled to dismissal of the corporation’s action against him for breach of his fiduciary duties because the director used information that he learned while he was a director of the corporation to later compete with such corporation in bidding for a contract with a city. (Leased Access Pres. Ass'n v. Thomas, C.A. No. 2019-0310-KSJM, 2020 Del. Ch. LEXIS 227, *9, (Del. Ch. Jan. 8, 2020)).
Former directors of Delaware corporations should be aware that actions taken during their directorship (or even after their directorship, if using information obtained while a director) can carry with them breach of fiduciary duty exposure even after they cease to be a director of such corporation.
This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。
Related Lawyers
Related Articles
Related Capabilities
© 2026 Jenner & Block LLP. Attorney Advertising. Jenner & Block LLP is an Illinois Limited Liability Partnership including professional corporations. This publication, presentation, or event is not intended to provide legal advice but to provide information on legal matters and/or firm news of interest to our clients and colleagues. Readers or attendees should seek specific legal advice before taking any action with respect to matters mentioned in this publication or at this event. The attorney responsible for this communication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome. Jenner & Block London LLP, an affiliate of Jenner & Block LLP, is a limited liability partnership established under the laws of the State of Delaware, USA and is authorised and regulated by the Solicitors Regulation Authority with SRA number 615729. Information regarding the data we collect and the rights you have over your data can be found in our Privacy Notice. For further inquiries, please contact dataprotection@jenner.com.
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