Breach of director^s fiduciary duties

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.


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