Who owes fiduciary duty to a company?
Traditionally, corporate directors and officers owe fiduciary duties to the corporation and its stockholders. The boards of directors establish company policies and appoint and delegate certain duties to corporate officers.
The main duty of shareholders is to pass resolutions at general meetings by voting in their shareholder capacity. This duty is particularly important as it allows the shareholders to exercise their ultimate control over the company and how it is managed.
In a normal public corporation, shareholders do not owe fiduciary duties to each other. However, in closely-held corporations, the shareholders go into business with a small number of people they know very well. … Such a fiduciary duty is held on duties of utmost good faith, loyalty, honesty and fairness.
Similarly, the Supreme Court in BCE held that directors have a fiduciary duty to the corporation “and only to the corporation.” Where the interests of the corporation and particular stakeholders do not coincide, “it is important to be clear that the directors owe their duty to the corporation, not to stakeholders, and …
Shareholders v Directors – who wins?
- to attend and vote at general meetings of the company;
- to receive dividends if declared;
- to circulate a written resolution and any supporting statements;
- to require a general meeting of the shareholders be held; and.
- to receive the statutory accounts of the company.
The owners of a corporation are its shareholders. They invest capital, receive voting rights over certain matters, and receive dividends and residual claim on the company’s assets.
The shareholders of any company have a responsibility to ensure that the company is well run and well managed. They do this by monitoring the performance of the company and raising their objections or giving their approval to the actions of the management of the company.
It is firmly established under California law that controlling shareholders of closely held corporations owe minority shareholders a fiduciary duty not to compete against their own corporations.
Control shareholders have a fiduciary duty to the minority shareholders to act with “good faith and inherent fairness.” As such, majority owners have a fiduciary responsibility not to use their influence to engage in self-dealing, including actions that are unfairly prejudicial to the minority shareholders.
Is a fiduciary duty a legal duty?
A fiduciary duty is a legal duty where one person (the “fiduciary”) has to act in the best interests of another (the “beneficiary”). … The beneficiary trusts that the fiduciary will act in good faith.