A Duty Owed - Discussing a Director's Fiduciary Liability

Abstract

Directors of a Company have been variously defined as the ‘brain’, ‘trustees’, ‘agents’, or even ‘managing partners’ of a company. Whichever label one attributes to them, one would agree that they, being the representatives of the company, have wide powers. However, the duties imposed upon directors draw margins around the powers conferred on them. These obligations are imposed both under the statutory law as well as under common law. This article analyses the scope of directors’ fiduciary duties, which falls largely under the realm of common law. One cannot undermine the importance of this duty. It infuses every aspect of a director’s conduct. With the growing complexity of the commercial world, the scope of director’s responsibility is expanding and with it, the compass of fiduciary duty is also evolving. Under this topic, the article attempts to answer two basic questions: 1.) It analyses first what the term ‘fiduciary duty means, what it entails, and why it is relevant in today’s times; 2.) Next, it addresses the debate on the beneficiaries of these duties, or in other words, to whom do the directors owe these duties? Is it to the company or to the shareholders?