Fiduciary duties of directors

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Fiduciary duties of directors
  • What is a fiduciary relationship?
  • A director's fiduciary duties
  • Which directors owe fiduciary duties?
  • Fiduciary duties owed to the company
  • Continuing duties
  • Statutory (general) duties
  • Fiduciary duties of a director
  • Duty to act in the best interests of the company
  • Duty to act within the powers conferred by the company's memorandum and articles of association and to exercise powers for proper purposes
  • More...

Fiduciary duties of directors

This Practice Note summarises the traditional fiduciary duties of company directors, including the duty to act in the best interests of the company, the no conflict and no profit principles, and the equitable duty of confidence. It also considers the remedies for breach of the duties, and also the various ways in which a director may be relieved of the consequences of a breach, namely ratification, indemnity and insurance.

What is a fiduciary relationship?

A fiduciary duty indicates a relationship of trust, assurance or confidence between two or more parties.

While there is no inherent limit to the types of relationship that would be construed as fiduciary under the common law, some relationships are automatically fiduciary, eg those between trustee and beneficiary, solicitor and client, principal and agent, business partner and co-partners, mortgagor and mortgagee.

Other relationships will be characterised as fiduciary if one person has agreed to act for or on behalf of another in circumstances where a relationship of trust and confidence is deemed to have arisen (eg between a family member and an elderly relative, or between co-venturers in a joint property venture). The principal touchstone appears to be the existence of an obligation of loyalty, although each category of relationship, and indeed every case, falls to be determined according to its particular circumstances.

Exceptionally, it seems that a fiduciary duty may be

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