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Why Self-Monitoring Is Necessary in a Corporation

One of the most important responsibilities of a corporation is to institute a good self-monitoring system. While the steps necessary to establish a good self-monitoring system can be found in another post, it is important to understand why a good self-monitoring system is necessary. Because there are so many aspects of the duties of care owed in a corporation, establishing a good self-monitoring system cannot be overlooked.

A good self-monitoring system is part of the duty of care owed by the directors to the corporation. Engaging in good self-monitoring is crucial for directors to avail themselves of the business judgment rule. In essence, if a director can point to a good monitoring system in place, he can prove that he is fulfilling his duty of care. Engaging in general monitoring proves that the director is paying attention to the corporation, and is therefore not neglecting the duties owed.

The most important aspect of self-monitoring is the ability for a corporation to flush out improper or illegal activity before it becomes an issue. Even if improper or illegal activity manages to slip through the cracks, a good self-monitoring system can prevent further activity of the type from occurring. A good self-monitoring system can, in essence prevent unnecessary amounts of turmoil and prevent a lot of resources from going to waste.

Setting up a good self-monitoring system is not a one-size-fits-all ordeal. It is important to understand the needs of your own company in order to put in place a good self-monitoring system. Consulting the right team with years of experience in the field can help set up the proper self-monitoring system for your corporation. Call the Trembly Law Firm at (305) 431-5678 today to schedule your consultation.

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