What must a director do if confronted with a potential usurpation of opportunities?

• A. Take the opportunity personally.
• B. Report to the board and refrain unless rejected.
• C. Immediately disclose to the public.
• D. Ignore the opportunity if it's not profitable.

Answer: (B)

The essential idea is the corporate opportunities rule: a director owes a loyalty duty and cannot seize for personal gain an opportunity that belongs to the corporation. If an opportunity arises that is in the corporation’s line of business or comes through the director’s position, the director must present it to the board and refrain from pursuing it until the board decides.

So, when faced with a potential usurpation, the director should bring the opportunity to the board’s attention and not act on it personally in the meantime. If the board rejects the opportunity or does not act within a reasonable time, the director may pursue it themselves. This protects the corporation from being deprived of opportunities and preserves the director’s duty of loyalty.

Taking the opportunity personally would violate that loyalty. Public disclosure is not appropriate and could mislead shareholders and breach fiduciary duties. Ignoring the opportunity simply because it might not be profitable also fails to honor the director’s duty to present and defer to the board on opportunities that may affect the corporation.