Corporate Art Collecting and Fiduciary Duties to Shareholders: Legal Duties and Best Practices for Directors and Officers

Abstract

Corporate art collections pose unique challenges to directors charged with an “unyielding fiduciary duty to the corporation and its shareholders.” Although corporate insiders may not consider art in the corporate collection an investment, corporate shareholders may feel otherwise. Shareholders deserve to know that when valuable fine art assets are acquired by the company, those assets are properly purchased, acquired for sound business reasons, carefully stewarded, and disposed of consistent with the law and with best practices in corporate governance and fine art collection management. This Article examines corporate art collecting within the context of these legally mandated duties and best practices. In this Article, we review the doctrines of primacy and corporate waste to evaluate whether corporate art collecting can maximize shareholder value or satisfy other legitimate business purposes. Corporations are advised to plan collecting activities strategically to ensure company art acquisitions align with sound business purposes justifying those purchases, and to set acquisition and collection management budgets that are reasonable and appropriate to the company’s ongoing financial condition.