Fiduciary duties - company management, Business Law and Ethics

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Fiduciary Duties:

The fiduciary duties of directors arising from their fiduciary relation to the company have been the subject of consideration in an enormous body of case law but the ratio decidendi of the cases can be reduced to two fundamental propositions:

(a) A director is not allowed to put himself in a position where his interest and duty conflict.

The application of this rule is illustrated by the following cases:

Aberdeen Rly Co v Blaikie Brothers (68). S.200(5) adopts this rule by providing that nothing in section 200(5) shall be taken to prejudice the operation of "any rule of law" restricting directors of a company from having any interest in contracts with the company".

S.200 requires a director who is in any way interested in a contract with the company to declare the nature of his interest at a board meeting. He must disclose the interest at the first board meeting at which the contract is to be discussed or, if he did not have an interest at that time, at the first board meeting after his interest arose.


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