Duncan Lewis Litigation Solicitors – Breach of director's fiduciary duties
Directors have certain obligations under the Companies Act 2006, which they must fulfill – and failure to do so can result in them being removed by shareholders or even being disqualified from being a director.
The Companies Act Sections 171-178 sets out the duties and obligations of a director, which include:
- To act in accordance with the company’s constitution, and only exercise powers for the purposes for which they are conferred
- To act in the way which, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole
- To exercise independent judgement
- To exercise reasonable care, skill and diligence
- To avoid conflicts of interest
- To declare interest in proposed transaction or arrangement.
A fiduciary duty involves a relationship in which the fiduciary – eg a director of a company – holds a position of trust in the management of monies or property for a shareholder (called a “principal”).
If the relationship between a fiduciary and principal breaks down or the fiduciary fails to fulfil its legal duties, the principal may be able to make a claim for damages.
This might be the case if, for example, the director of a company uses his or her position to benefit personally or financially from their position without declaring the benefit.
In such cases, the courts can award damages – and any financial asset or other property gained as a result of a breach in fiduciary duties is likely to be awarded to the company from which the benefit derived.
It is important to take legal action as soon as possible in a case involving a breach of fiduciary duties – Duncan Lewis commercial litigation solicitors can advise at any stage of a dispute, including advising shareholders on bringing a claim, or advising director on defending a claim being brought against them by shareholders.
Duncan Lewis can also advise in cases where illegal activity may have taken place in a fiduciary breach.
For expert legal advice on commercial and company law and Breach of Fiduciary Duty, call Duncan Lewis Commercial Litigation Solicitors on 0333 772 0409.