Which scenario best illustrates a breach of the corporate opportunities doctrine?

• A. A director declines a lucrative deal that the corporation would not have pursued.
• B. A director takes a lucrative opportunity in the corporation's line of business for personal gain that the corporation would have pursued.
• C. A director resigns from the board to avoid conflicts.
• D. A director informs the board before pursuing a competitive opportunity.

Answer: (B)

The concept tested is the corporate opportunities doctrine, which bars directors from seizing business opportunities that belong to the corporation—especially ones in the corporation’s line of business and that the corporation would have pursued—because directors owe loyalty to the company and must not use their position to gain for themselves.

In this scenario, the director takes a lucrative opportunity in the corporation’s line of business for personal gain, and the corporation would have pursued it. Because the director used their role and access to obtain this opportunity for themselves, they have usurped a corporate opportunity, violating the duty of loyalty. This is exactly the kind of self-dealing the doctrine forbids.

By contrast, declining a deal the corporation wouldn’t have pursued, resigning to avoid conflicts, or informing the board before pursuing a competitive opportunity are not breaches under the doctrine—either because there is no opportunity for the corporation to claim, or because proper disclosure and governance steps are taken.