Corporate opportunity doctrine and director introductions

What is the corporate opportunity doctrine, and why should directors care?

The corporate opportunity doctrine says that a director or officer generally may not take for personal benefit a business opportunity that belongs to the corporation they serve. It stems from the duty of loyalty. If you sit on a board and also introduce companies to SourceX for a possible reward, the question is whether any given introduction is an opportunity that belongs to one of your boards. In most cases it is not, but the check should be deliberate and documented.

This is general information, not legal, tax or financial advice. The doctrine is shaped by state law and varies by jurisdiction and by facts; Delaware is the most cited, and many companies are incorporated there, but your company may be governed by another state's law. Confirm with your own counsel before acting.

How do courts usually frame the test?

Courts in many states ask connected questions along these lines, and the exact formulation differs by state. This page does not cite a specific case, so ask counsel for the controlling authority:

Because these tests are fact-based, the details of how you learned of a company matter more than the label.

What are waivers, and what does DGCL section 122(17) do?

Delaware's General Corporation Law lets a corporation, in its certificate of incorporation or by board action, renounce an interest or expectancy in specified opportunities or classes of opportunities. Section 122(17) is the provision usually cited. Some investor-backed companies use such renunciations for investors who sit on boards. Whether your boards have one, and how broad it is, is a question for the corporate secretary and counsel. Other states have their own provisions or none. This page does not reproduce the statute; ask your counsel to confirm the current statute and any case law that applies.

The 4-question screen for each introduction

Before introducing any company to SourceX, ask these four questions. Keep a one-line record of the answers.

• Source: did I learn about this company through a board seat, board materials or a confidential board relationship?
• Line of business: is licensing data, or the introduced company's business, something any of my boards does or is considering?
• Interest: has any board I serve discussed this company, its data or a related transaction?
• Conflict: would my reward create a conflict with my duty to any board or the company I am introducing?

If any answer is yes, pause, disclose to the relevant board or general counsel, and obtain clearance in writing before going further.

When might an introduction be risky?

What is the cleanest way to handle it?

1. Identify every board you serve and the relevant counsel or corporate secretary on each.
2. Ask whether a corporate opportunity policy or renunciation exists.
3. For each potential introduction, run the four-question screen.
4. If anything overlaps, disclose and get written clearance, or decline.
5. Tell the company's owner that you may receive a reward before introducing.
6. Keep a short log of what you checked and when.

If your situation involves an introduction that someone else may already have in motion, read how to handle an introduction that overlaps with an existing opportunity, and for declining a request politely, see how to decline an introduction request.

How should a director document the decision?

Write a short memo to file for each introduction, a few lines is enough: the date, how you learned of the company, the boards you serve, the four answers and who, if anyone, cleared it. Keep it with your other board records, and tell your general counsel it exists. If a dispute ever arises, a contemporaneous note showing you thought about the issue before acting is far more useful than an explanation constructed afterwards. Where a board has a conflicts committee or an annual disclosure form, list your SourceX partner role there too.

What does SourceX need from a director?

Only a clean introduction. A US company with 50+ full-time employees at peak (contractors excluded), several years of documented operations, rights to license and an authorized sponsor can apply directly at sourcex.si/apply using your referral link. You share basic fit information only and never confidential records. The company agrees its own price and terms and nothing is binding until it signs. See which US businesses fit.

Other professionals face parallel checks: see SBA Form 159 and referral agents for how a specific rule is read, and quality of earnings providers for independence questions.

How do partner rewards work?

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company. The reward is paid only after the buyer pays and SourceX receives its fee, and no reward is guaranteed. Directors should check board policies, investor agreements and any code of conduct before registering. See the program terms.

When should a director simply not refer?

• A board you serve is, or plans to be, active in data licensing.
• The company's data was seen only through board materials.
• Counsel advises against it.
• The company is under 50 full-time employees at peak, or would clearly fail the baseline. See messy but valuable data for what does and does not disqualify.

Next step

Send your general counsel or corporate secretary the four-question screen and ask whether your boards have a corporate opportunity policy. When you are clear, register as a partner and use the network opportunity finder to choose introductions from outside your boards.