Breach fiduciary duty
Directors have certain obligations under the Companies Act 2006, which they must fulfil – and failure to do so can result in them being removed by shareholders or even being disqualified from being a director.
Commercial and company law
What is a fiduciary?
A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal”.
Fiduciary duties are required in order to prevent unwanted conduct on the part of the fiduciary.
Fiduciary duties are separate to and additional to a trustee’s duties. All trustees are fiduciaries but not all fiduciaries are trustees. There is no overlap.
A trustee’s specific fiduciary duties towards a beneficiary include not to profit from the trust and avoiding a conflict of interests.
Can breach of a fiduciary duty be avoided?
A fiduciary may be able to avoid liability for breach of fiduciary duty by seeking the informed consent of his principal (i.e. that the beneficiary/beneficiaries was/were aware and authorised the action taken by the trustee).
Any action taken in breach of a fiduciary duty can be set aside even if there has been no resulting loss. A proprietary remedy enabling the claimant to assert rights against property in the in the defendant’s possession may also available.
We act for trustees, executors, personal representatives and for individuals claiming against estates, trustees or other parties. We also often advise on complex and cross-jurisdictional issues, and regularly work alongside other intermediaries based offshore.