Corporate opportunity is a doctrine within fiduciary duty law that prohibits senior executives and directors from diverting business opportunities that belong to the corporation for their own personal benefit. It reflects the principle that fiduciaries must act in the best interests of the corporation and may not exploit their positions for self-gain.
Courts use different tests to determine what qualifies as a corporate opportunity. In Broz v. Cellular Information Systems, Inc., 673 A.2d 148 (Del. 1996), the Delaware Supreme Court articulated four factors where a fiduciary may not take an opportunity, if:
- the corporation is financially able to pursue it,
- it falls within the corporation’s line of business,
- the corporation has an interest or expectancy in it, and
- taking it would create a conflict with the fiduciary’s duties to the corporation.
These factors illustrate that whether a fiduciary has usurped a corporate opportunity depends heavily on the circumstances. For example, if a director makes a personal bid on a business in the same industry, they may not breach their duties if the corporation lacked the financial ability to pursue the acquisition. By contrast, if the corporation could have done so, the fiduciary likely would have breached their duty.
Although jurisdictions differ on how the doctrine is applied, the general principle is that fiduciaries must disclose potential conflicts of interest they have, recuse themselves when necessary, and avoid concealing actions that could deprive the corporation of legitimate opportunities. Courts tend to be particularly critical when concealment is involved.
[Last reviewed in August of 2025 by the Wex Definitions Team]