Which governance principle is violated when a director uses confidential information for a personal venture?

• A. Duty of loyalty
• B. Duty of confidentiality
• C. Duty of care
• D. Duty of disclosure

Answer: (A)

This question centers on the fiduciary duty of loyalty. Directors must act in the corporation’s best interests and avoid self-dealing or conflicts of interest. Using confidential information for a personal venture is a textbook example of self-dealing: the director leverages information gained through their role to pursue personal gain, placing their own interests above the company’s. This directly breaches the obligation to be loyal to the corporation.

While there is a separate obligation to maintain confidentiality, and care requires prudent decision-making, the core issue here is loyalty because it encapsulates the prohibition against using corporate resources or information for personal benefit and the presence of a conflict of interest.